DETROIT — General Motors Co. will pay $900 million to settle a criminal probe by the U.S. Justice Department over the ignition switch flaw that has bogged down CEO Mary Barra in recalls and investigations since almost the start of her tenure.
The settlement is part of a deferred-prosecution agreement under which the U.S. will monitor some of the automaker’s safety policies and the company must cooperate with the government, federal prosecutors in New York said Thursday.
GM was charged with conspiracy and wire fraud, claims that will be dismissed in three years if GM complies with the accord.
GM, the largest U.S. automaker, recalled 2.59 million small cars to replace a faulty ignition switch, which has been linked to at least 124 deaths.
“The worst part of this tragedy is that it was entirely avoidable,” Christy Romero, the special inspector general for the Troubled Asset Relief Program, said at a news conference. GM, which received $49.5 billion in a 2009 government bailout, “could have significantly reduced the risk of this deadly defect by improving the key design for less than one dollar per vehicle.”
The Detroit-based company announced that it will resolve some civil cases arising from the recall and a shareholder lawsuit in Michigan, and record a third-quarter charge of $575 million related to those settlements.
GM still faces other lawsuits in which customers and injury victims are seeking billions of dollars. “The mistakes that led to the ignition switch recall should never have happened. We have apologized and we do so again today,” Barra said in a statement. “We have faced our issues with a clear determination to do the right thing.”
Barra, 53, became GM’s first female CEO in January 2014. A few weeks later, the switch recalls began and soon became her biggest concern. GM stock has lost 22 percent of its value since she took the top job.
The criminal settlement might end almost two years of questions about what GM’s executives knew and whether they would be held personally responsible. Lawyers for vehicle owners and injured motorists have speculated whether Barra and others were kept in the dark by mid-level managers or whether they knew of the defect well in advance.
