July 15, 2014 at 5:04 pm

Senators: Make it crime for auto execs to hide safety issue

Washington —Two senators will introduce legislation Wednesday that would make it a crime for an auto executive — or an executive from any other company — to conceal a defect that could pose a risk of death or serious physical injury. The proposed law comes in response to the General Motors Co. ignition switch recall crisis, blamed for at least 13 deaths.

The legislation also would require automakers to notify the National Highway Traffic Safety Administration within 24 hours that a defect poses a serious risk to safety; current federal law gives them five days.

Auto executives who broke the law would face up to five years in prison and fines. But executives who disclosed problems to federal officials would face no charges.

U.S. Sens. Richard Blumenthal, D-Conn., and Bob Casey, D-Penn., said Tuesday they will introduce the 10-page Hide No Harm Act of 2014.

In a Detroit News interview Tuesday, Blumenthal said he thinks if his bill had been law “the culture of secrecy would have been stemmed, if not stopped. It would have been a different GM... I think there is need for accountability and that message needs to be driven right to their desks.... (Auto execs) ought to feel that it’s more than just an abstract concept.”

Automakers have recalled nearly 40 million vehicles this year, shattering the record set in 2004 when 30.8 million vehicles were recalled. GM has the most recalls, with 29 million vehicles called back worldwide, including 25.7 million in the United States.

The senators said the bill was prompted by GM’s “ignition switch defect that corporate officers became aware of in 2004 but failed to issue recalls for until 2014, which resulted in deaths and injuries. Similar incidents involving the companies Second Chance Body Armor and Simplicity for Children have also resulted in deaths and injuries. In these cases, the corporate officers who knowingly concealed the defects suffered very little, if at all. Meanwhile, their actions have had detrimental consequences to consumers, employees, and shareholders.”

GM has admitted it broke the law by failing to notify NHTSA of its defective ignition switches and delaying for years its recall of 2.6 million vehicles with the defective switches. The U.S. Attorney’s Office in New York — aided by a federal grand jury and the FBI — is investigating whether GM committed fraud by failing to disclose the defects. The Securities and Exchange Commission and a dozen state attorneys general are also investigating. GM paid NHTSA a $35 million fine in May; it agreed to up to three years of special meetings and vowed to immediately disclose any possible safety issues.

In March, the Justice Department fined Toyota Motor Corp. $1.2 billion after the Japanese automaker pleaded guilty to wire fraud for concealing defects. But in a move that was criticized by many auto safety advocates, no executives were charged criminally.

Consumer advocate Ralph Nader argued in an interview in March that “companies don’t commit crimes — people at the companies do.” He said that in the settlement, “Toyota got what it wanted... None of their officials are prosecuted.”

U.S. Attorney General Eric Holder said Toyota engaged in a cover-up to keep selling cars, even though it knew it had problems. He called the automaker’s behavior “shameful.” “It showed a blatant disregard for systems and laws designed to look after the safety of consumers,” he said. “By the company’s own admission, it protected its brand ahead of its own customers.”

Holder issued a warning to the auto industry: “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.”

The senators will unveil the bill at a press conference joined by Rob Weissman, president of Public Citizen, and Katherine McFate, President of the Center for Effective Government.

The Alliance of Automobile Manufacturers — the trade group representing Detroit’s Big Three automakers, Toyota, Volkswagen AG and others — declined to comment. GM didn’t immediately return a message seeking comment.

DShepardson@detroitnews.com