US weighs charges against GM over ignition switch recall: WSJ – Reuters

Posted: Tuesday, June 09, 2015

WASHINGTON Federal prosecutors are weighing criminal wire fraud charges against General Motors Co (GM.N) over the company’s failure to recall vehicles equipped with faulty ignition switches, the Wall Street Journal reported on Tuesday.

Citing people familiar with the matter, the newspaper said U.S. prosecutors in New York are considering other possible charges and have not made a final decision. Authorities hope to reach a settlement with the automaker by the end of summer or early fall, the WSJ reported.

Before the GM shareholders’ meeting on Tuesday, Chief Executive Officer Mary Barra said the automaker has “cooperated fully” with prosecutors and any settlement would be “on their timeline.” She did not comment in detail on the report.

Reuters could not immediately confirm the Wall Street Journal report. A U.S. Department of Justice spokesman declined to comment.

According to the Wall Street Journal, prosecutors have determined that the company likely hid information about the switches and made misleading statements, a potential basis for wire fraud charges.

It was the latest potential legal problem for the No. 1 U.S. automaker as it grapples with the consequences of the deadly ignition-switch defect in its vehicles that has led to more than 100 deaths and 2.6 million recalls.

Detroit-based GM is already facing various legal action over the defect, although a U.S. judge in April ruled the company could be shielded from some lawsuits.

It also faces more than 4,300 claims for compensation from people who said they suffered injuries or from relatives of those killed in accidents, the lawyer overseeing the program has said.

The ignition-switch defect was originally noticed by GM more than a decade ago. But the first recalls began only in February 2014, despite years of consumer complaints.

The faulty ignition switches on Chevrolet Cobalts, Saturn Ions and other GM vehicles could cause their engines to stall, which in turn prevented air bags from deploying during crashes. Also, power steering and power brakes did not operate when the ignition switch unexpectedly moved from the “on” position.

GM said last year that it was being investigated by the U.S. Attorney’s Office in Manhattan for its handling of the faulty switch. Sources told Reuters last year that the office of U.S. Attorney Preet Bharara in Manhattan was interviewing present and former GM employees as part of a criminal probe, and prosecutors were working on a set of mail and wire fraud charges similar to the criminal case Toyota Motor Corp (7203.T) settled last year.

GM shares were up 0.7 percent at $35.25 on Tuesday morning.

(Reporting by Susan Heavey in Washington and Ben Klayman in Detroit; Writing by Matthew Lewis; Editing by Grant McCool)


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