NEW YORK: General Motors Co has agreed to pay USUS$900 million and sign a deferred-prosecution agreement to end a US government investigation into its handling of an ignition-switch defect linked to 124 deaths, two sources said.
The deal means GM will be charged criminally with hiding the defect from regulators and in the process defrauding consumers, but the case will be put on hold while GM fulfills terms of the deal, one source said.
No individuals would be charged in the criminal case, one of the sources said.
The company's expected US$900 million payment, confirmed by a second source, is less than the US$1.2 billion that Toyota Motor Corp paid to resolve a similar case.
GM declined to comment. Spokesmen for US prosecutors in New York and in Washington also declined to comment.
The terms of GM's deal with the government were not immediately known, including how many counts the automaker would be charged with, whether the automaker agreed to hire an independent monitor, or how long it would need to abide by the agreement before the case may be dropped.
The agreement was expected to be announced on Thursday, the sources said. Any deferred-prosecution agreement would require court approval.
"I am very hopeful the Department of Justice will hold GM fully accountable and presses for an acknowledgement of responsibility as well as monetary penalties," Democratic Senator Richard Blumenthal of Connecticut said in a telephone interview with Reuters.
GM, the No. 1 US automaker, took charges totaling US$4.2 billion in 2014 to reflect costs associated with recalls, and a special fund was established to compensate victims of the ignition switch defect. It was not immediately clear whether GM would take additional charges to account for a settlement of the criminal probe.
The settlement is a milestone in a case that over the past two years drove a transformation in the once cozy relationship between the auto industry and regulators in the US government.
Outrage over the GM ignition switch case prompted a much tougher approach by Washington towards auto safety issues and compelled automakers to act more quickly and comprehensively to recall vehicles with potentially dangerous defects.
GM Chief Executive Mary Barra in 2014 undertook a series of actions to atone for the ignition switch failure, including appointing a new safety czar, overhauling GM's product engineering organization, and pushing out 15 executives connected to the mishandling of the switch defects in a scathing report prepared by former federal prosecutor Anton Valukas, now a senior partner at the law firm Jenner & Block.
GM also recalled more than 30 million vehicles in North America in 2014 to fix a wide array of defects.
GM's approach contrasted with Toyota, which was slower to cooperate with regulators in response to defects related to incidents of sudden acceleration.
