General Motors Under Criminal Charge

Jae Hyun Ko

Professor Murphy

Written Assignment

October 15th 2015

General Motors under Criminal Charges

            Nowadays, many business transactions give a rise to legal issues. Among those issues, there are a number of legal issues in the automobile industry. Those issues impact a society and arouse public’s concern significantly because they generally involve a personal injury and death. One of the recent case in the automobile industry is the criminal charge against General Motors. GM recently faced a legal issue because its decision generated deaths and injuries. Not only is it crucial to look closely at the legal issues surrounding GM, but also we must consider ethical issues concerning the decision GM made. Then, we can see how this criminal charge had an impact on GM and the reasoning behind the court decision with in-depth knowledge of legal and ethical issues.

Since the early 2000s, General Motors had the problem with a faulty ignition switch, which could shut off the engine during driving and thereby prevent the airbags from inflating. This faulty ignition switches in products of GM led to the death of more than 100 people. However, Justice Department took nearly a decade to initiate a criminal charge against GM. Because GM now has both criminal charges and civil lawsuits, plaintiffs and prosecutor are both the customers and the government. The U.S. Justice department charged GM with wire fraud and scheming to conceal a deadly safety defect from U.S. regulators. However, the court has not prosecuted any individual yet. Victims’ family asserted that “monetary fines are grossly inadequate and will never serve as a serious deterrent to corporations, but jail time will”. U.S. Attorney Preet Bharara said the law makes it difficult to prosecute individuals or impose greater penalties on a company. The reason behind it is that there is no law that specifically forbids selling a car that has a defect that can kill people. Responsible Corporate Officer doctrine potentially could have applied to the executives of GM, but the doctrine focuses upon a person’s position in an entity as the basis for imposing liability and not whether he or she had a culpable intent or had any direct involvement whatsoever. The doctrine can lead to perverse results. This is why Bharara charged the company for failing to report the information that it should have exposed.

In addition to it, Bharara could have charged GM with corporate liability for homicide, most possibly manslaughter. However, it is very rare that the circumstances arise that persecutors can charge homicide and it is hard to find a specific person whose actions led to people dying. Because of such difficulty, Bharara charged GM with wire fraud because the automaker failed to recall millions of vehicles with defected ignition switch. Today, the statute can cover almost anything that falls under the legal concept of fraud if the transaction involves an email or phone call. For this virtual power, GM had no defense against it. So, GM has to pay 900 million dollars to settle the criminal charges when it also has to settle the individual lawsuits tied to a defective ignition switch and other recalls. This settlement is based on 3-year deferred prosecution agreement which means that GM will be under the probation for three years. Even if GM manages to settle all related legal issues, ethical problems are not resolved by either court’s decision or monetary compensation. First, we will examine the case that dealt with the similar ethical and legal issues.