GM and Toyota: Unequal Justice

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“I got hoodwinked! What a phony,” Van Susteren said about Loretta Lynch and her deal with GM on her show this week. “The ink had hardly dried on her new policy when she sold you out. Just hours ago, the DOJ cut a deal with General Motors [GM] for failing to disclose a known ignition switch flaw in its cars that killed 124 people.”

To add insult to injury, the people who committed the crimes don’t have to pay, only the shareholders have to pay.

GM and the Federal government reached a $900 million dollar settlement over an ignition-switch problem that cost the lives of at least 124 people and injured another 275. GM’s profit annually is $2.8 billion and this fine will barely touch them. There won’t be any criminal cases even though they lied, hid the defect from regulators, and committed wire fraud. The sequence of events can be found at abc news.

GM is also paying out $575 million in wrongful death suits.

Preet Bharara, the United States Attorney for the Southern District of New York, is the public face of the deal but Loretta Lynch is the DOJ head.

Loretta Lynch

The government says they’ve been extraordinarily cooperative and it would be hard to prove their guilt. As long as they say they are guilty, continue to cooperate, they’re free and clear in three years. They were charged with wire fraud and scheming.

General Motors CEO Mary Barra
General Motors CEO Mary Barra

Mary Barra has only been CEO since January 15, 2014, and has apologized for the corporation, but claimed no knowledge of the ignition switch design flaw until January 31.

Barra, however, has been with GM since 1980 and has been an important part of the company. She is on their board of directors, and GM’s own website describes her as a “global industry leader in automotive design and technology, product quality, customer care, and business results.” Fortune magazine lists her on their “50 Most Powerful Women in Business” and Forbes puts her among their “100 Most Powerful Women.”

Our own federal regulators may have blood on their hands in this case.

GM received bailout money and, contrary to reports, never paid it all back, but it has favored status, especially since they are unionized and were taken over by the powerful United Auto Workers union. They still own  8.7 percent of GM shares.

The Feds turned a blind eye to GM’s safety standards while our Justice Department pursued harsh punitive retribution against Toyota for arguably lesser infractions.

Toyota executives were called before Congress and received harsh criticism.
Toyota executives were called before Congress and received harsh criticism.

Toyota is not unionized.

Toyota settled a $1.2 billion law suit brought by the U.S. Justice Department. Toyota admitted it “misled U.S. consumers by concealing and making deceptive statements about two safety issues involving its vehicles.”

Under the terms of the settlement, the payment is not spread out over several years. Instead Toyota had to wire-transfer $1.2 billion to the U.S. Marshals Service within days of the agreement.

It was the largest penalty of its kind ever imposed on an automotive company, then-DOJ Chief Eric Holder said.

Eric Holder

In March, 2014, the Department of Justice reached a $1.2 billion financial penalty for questionable complaints about improperly affixed floor mats and unproven acceleration and sticking gas pedal problems.

“Other car companies should not repeat Toyota’s mistake: A recall may damage a company’s reputation, but deceiving your customers makes that damage far more lasting,” Holder warned.

He should have added – unless you are GM.

In 2011, the Department of  Transportation released the results of its study into the blizzard of reports that various Toyota and Lexus models were accelerating out of control. The DOT concluded that, other than a number of incidents caused by accelerators hanging up on incorrectly fitted floor mats, the accidents were caused by drivers depressing their accelerators when they intended to apply their brakes. “Pedal misapplication” was the DOT’s delicate terminology  for this phenomenon.

Toyota repeatedly denied that its vehicles had an electronic flaw that might cause them to accelerate unexpectedly. They blamed such incidents on three possible causes: drivers mistaking the gas pedal for the brake; gas pedals getting stuck under floor mats; or sticky gas pedals that don’t throttle back quickly as foot pressure eases.

A 10-month investigation conducted primarily by NASA engineers and initiated by DOT found no evidence that electronic defects or software code errors could have caused the thousands of sudden-acceleration incidents reported over the last decade. That review blamed the incidents on the same mechanical issues identified by Toyota.

The Feds didn’t get them on the cases themselves. The charge was that Toyota defrauded consumers in the fall of 2009 and early 2010 by issuing misleading statements about safety issues in Toyota and Lexus vehicles.

Meanwhile, Government Motors was “keeping secret” serious problems with millions of their cars since 2002.

We humiliated the Japanese with little proof and for cases that were almost completely caused by driver error.

Why were these two companies treated so differently?

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2 COMMENTS

  1. Ford had a similar issue and still holds the #1 and #2 records for most recalls. Ford wanted to send out stickers for customers to put on the dash!! “Warning vehicle may slip out of park” There were many deaths. But the government said they didn’t need to be held responsible.

    Ford has taken HUGE bailouts and the public is unaware!

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