GM to pay $575M to settle ignition switch lawsuits

Under the settlement GM agreed to hire an independent monitor of its recall process to insure the company continues to comply with federal safety reporting regulations. ( GM ) is expected to reach a criminal settlement with the U.S. Justice Department as soon as Thursday, over the company’s handling of an ignition flaw linked to more than 100 deaths, according to several reports.

Prosecutors likely chose to charge GM with wire fraud because the company used electronic communications to interact with the government’s National Highway Traffic Safety Administration, the agency that it is required by law to notify when it finds out about a safety defect.

Last year, GM recalled 2.6 million older small cars worldwide to replace the faulty switches.

The 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.

Plaintiffs are seeking damages for deaths and injuries blamed on vehicle defects, as well as economic losses such as lost vehicle value. The company says the money also will settle a class-action lawsuit filed by shareholders. During the first half of this year, GM slipped to third place in global sales as Volkswagen edged Toyota out of first place. GM hired former federal prosecutor Anton Valukas to investigate the matter, and he found no deliberate cover-up on the part of top executives. And it started a program that encourages employees to speak up if they uncover a safety concern. It was unclear if any individuals would be charged in the ignition switch probe. In all, many millions of cars are affected across six brands in the US alone. She said she felt like she was in mourning again and called the financial penalty a “slap on the wrist”.

Last year Toyota agreed to pay $1.2 billion to settle a case related to its failure to recall cars despite reports of unintended acceleration.

GM did not disclose the amount it has agreed to pay in that civil case, but it said it said it would take an additional $575 million charge against earnings to account for the payments in both the civil and criminal cases.