A Law in Need of Changing

The sum of $900 million may seem like a considerable amount of money, but a fine to that tune was nevertheless inadequate punishment for General Motors’ ignoring of a flawed ignition switch that has been tied to at least 124 deaths.

The U.S. Justice Department’s announcement of the penalty last Thursday settled criminal charges related to the automaker’s knowledge that the switch’s malfunction could shut off the car while it was being driven, disabling the airbag, power steering and power brakes.

GM has admitted that its employees were aware of the problem nearly a decade before it began to recall millions of the cars early last year. The criminal charges stemmed from that long delay, during which the switches’ malfunctioning resulted in many crashes, some of them fatal.

No individual GM executives, however, were charged in the case — a fact that rightly outraged relatives of victims of the malfunctions. One, Laura Christian, whose 16-year-old daughter was killed in 2005, put it succinctly: “While nothing can bring my daughter back, we need a system where auto executives are accountable to the public and not just corporate profits.”

The Justice Department, which had focused its attention only on the period between spring 2012 to February 2014, when GM began recalling 2.6 million older cars to fix the switch, agreed to defer prosecution in the case, essentially placing the company on probation for the next three years. The criminal case will then be dropped if GM continues to cooperate with federal authorities during that time.

U.S. Attorney Preet Bharara, the United States attorney for the Southern District of New York, who made the announcement, said the law as it is written makes it difficult to prosecute individuals or to impose greater penalties on a company.  He noted that it isn’t currently illegal to sell a car that has a defect that can kill people. That, he explained, is why the company was charged only for failing to report the information it had about the defect.

“We apply the laws as we find them,” he said, “not the laws as we wish [they] might be.”

In that case, we need to find different laws here. That is to say, to change the law to more easily open criminal prosecutions against individuals in corporate office who may have acted, or not acted, in ways that caused innocent people grievous harm or death.

Mr. Bharara said that once the problem was disclosed, the cooperation by GM executives was “fairly extraordinary.” The outrage, though, lies in the fact that the disclosure only occurred long after the problem was clearly recognized.

Mr. Bharara allowed for the possibility that individuals could still be charged. Two employees in particular were singled out in the complaint as playing a central role in concealing information from regulators.  But the U.S. Attorney stressed that bringing a case against employees faces higher legal hurdles than in some other industries.

The same day the settlement was announced, Mary T. Barra, GM’s chief executive, met with an estimated 1,000 employees at GM’s technical center north of Detroit, and apologized.

“Let’s pause for a moment and remember that people were hurt and died in our cars,” she said. “That’s why we are here.”

And she admitted that it will take more than apologies for GM — which received a $49 billion government bailout in 2009 to survive bankruptcy — to restore its reputation in the eyes of consumers.

She further acknowledged that “apologies and accountability do not amount to much if you don’t change your behavior.”

That acknowledgement is important and laudable. As is GM’s agreement to hire an independent monitor of its recall process to ensure that the company complies with federal safety reporting regulations.

But there will always be people in corporate posts who consider the bottom line their top priority and are less concerned than they should be about the impact their decisions may have on consumers.

And if the worst case scenario for a decision-maker is nothing more than monetary loss — and only corporate monetary loss, at that — the likelihood of irresponsible decisions is far from negligible. Whatever laws do not effectively address that unfortunate fact should be changed without delay.

This article appeared in print on page 10 of the September 21st, 2015 edition of Hamodia.