GM to pay $1M penalty for ignition switch accounting trouble
{{#rendered}} {{/rendered}}General Motors CEO and chairperson Mary Barra talks with reporters after the introduction of the GMC 2018 Terraine SUV before the start of press days for the North American International Auto Show in Detroit, Michigan, U.S., January 8, 2017. REUTERS/Rebecca Cook - RTX2Y0RI
General Motors will pay the federal government a $1 million civil penalty for violating accounting rules involving the company's deadly ignition switch scandal.
The penalty, announced Wednesday as a settlement with the U.S. Securities and Exchange Commission, is for failing to have accounting controls in place to determine the potential for a recall and estimate the possible loss.
GM said it consented to an SEC cease-and-desist order without admitting or denying any wrongdoing.
{{#rendered}} {{/rendered}}The order found that GM personnel knew in the spring of 2012 that the switches were a safety issue but failed to tell accountants until November of 2013. Because of that, for at least 18 months, accountants didn't properly evaluate whether there would be a recall or the potential losses from the scandal, the agency said.
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"Internal accounting controls at General Motors failed to consider relevant accounting guidance when it came to considering disclosure of potential vehicle recalls," Andrew Calamari, director of the SEC's New York regional office, said in a statement.
{{#rendered}} {{/rendered}}GM said in a statement that since the ignition switch problem, it has reorganized vehicle engineering teams for greater accountability and set up a new vehicle safety organization.
GM knew about problems with the switches for more than a decade before it finally recalled 2.6 million small cars worldwide in 2014 to replace the defective switches. The switches could slip from the "run" to "accessory" or "off" positions. That would shut down the engine and disable the air bags and power-assisted brakes and steering. The switches are responsible for at least 124 deaths and 275 injuries.
GM has paid nearly $875 million to settle death and injury claims, including $600 million from a fund administered by compensation expert Kenneth Feinberg, and $275 million to settle 1,385 separate claims. It also has paid $300 million to settle shareholder lawsuits. But some other claims are pending in court.