New York — The federal prosecutor who led the government’s 18-month investigation into General Motors’ deadly ignition switch recall says the public is safer and the auto industry is now on notice about the consequences of not getting unsafe vehicles off the road.
U.S. Attorney Preet Bharara in Manhattan told The Detroit News in a recent interview that his prosecutors have helped make the nation’s roads safer — by sending a powerful message to automakers: We will investigate and prosecute if you fail to follow the law.
His office has been especially aggressive in moving quickly to investigate wrongdoing by automakers.
In September, General Motors Co. agreed to a $900 million consent decree after it was charged with two felony counts. It will face three years of oversight by a federal monitor as part of a deferred prosecution agreement. Bharara’s office said Thursday it has named former New York federal prosecutor Bart M. Schwartz as the monitor. In March 2014, Toyota Motor Corp. paid $1.2 billion as part of a deferred prosecution agreement and faces three years of oversight by former U.S. Attorney David N. Kelley.
“I think criminal corporate resolutions like the ones in Toyota and GM, the first of their kind in the auto industry, make a difference. No company wants to publicly admit to a detailed statement of facts that lays out their failures or pay a big fine. Nor do they want to suffer the reputational harm that comes with such criminal resolutions,” Bharara said. “I would think the management and boards of other car companies have had discussions about how to avoid going through the same thing and have considered reporting and correcting safety issues sooner than they otherwise might have. It is obviously difficult to calculate exactly how much safer the public is as a result, but that undoubtedly has happened.”
By contrast, the National Highway Traffic Safety Administration can only impose small fines. The agency fined GM $35 million in May 2014 and Toyota about $50 million for three delayed recalls.
Bharara defended his decision against criticism for not charging any individuals with crimes. He noted that in a century no federal prosecutor has brought criminal charges against auto executives who failed to get dangerous vehicles off the road.
The only prosecution of an automaker came in Indiana when a local prosecutor filed reckless homicide charges against Ford Motor Co. in the 1978 deaths of three teenagers killed after a 1973 Ford Pinto caught fire and exploded after being rear-ended by a truck. A jury exonerated the Dearborn automaker in 1980 after a 10-week trial on three felony counts.
Prosecutors “had a duty and obligation both morally, professional and intellectually to those victims and if there was a way to do it, we would do it and if there’s not we can’t,” Bharara said. “Some people were disappointed in how far we were able to go, but we still went farther than anybody else in history.”
He said one difficulty is that lack of specific criminal statutes. Automakers in 1966 successfully lobbied to prevent the inclusion of criminal penalties in the Safety Act. “Part of the reason there aren’t more prosecutions in the auto industry is because of the available laws. Stronger laws have been suggested, but they have not passed,” Bharara said.
Bharara hasn’t ruled out the possibility of bringing criminal charges against individuals.
Earlier this month, U.S. Sens. Richard Blumenthal, D-Conn., and Bob Casey, D-Pa.. introduced the Hide No Harm Act of 2015, legislation that would make it a crime for a corporate officer to knowingly conceal information about a corporate action or product that poses the danger of death or serious physical injury to consumers or workers. Under the legislation, any officer who conceals such information could face up to five years in prison and potential fines and any individual who reports potential danger to a federal regulatory agency or officer would be provided a safe harbor from criminal liability.
Clarence Ditlow, director of the Center for Auto Safety, says automakers must be held to account — like executives in other industries whose actions lead to deaths.
“Not until an auto company official is put in jail will automakers change their behavior. All one has to do is look at the millions of dollars auto companies spent on lobbying to keep criminal penalties out of the Safety Act from 1966 to present to realize imposition of criminal penalties is the real game changer and it hasn’t happened,” Ditlow said. “Fines do nothing more than change how manufacturers calculate costs; they don’t change behavior. Until Preet Bharara treats auto executives like peanut butter executives and sends them to jail, nothing will change the unlawful behavior of auto companies.”