Federal prosecutors have reached agreement with General Motors to resolve a criminal investigation into how the Detroit automaker broke the law by concealing a deadly problem with small-car ignition switches, three people briefed on the case said Wednesday.
Under the deal, GM will pay a fine of around $900 million in a deferred prosecution agreement on a wire fraud charge. That means any charges would be dismissed if GM complies with oversight and other terms for three years, said one of the people. All of the people asked not to be identified because the agreement isn't scheduled to be formally announced until Thursday.
A spokeswoman for Manhattan U.S. Attorney Preet Bharara wouldn't comment on the case, nor would GM spokesman Patrick Morrissey. The deal was first reported Wednesday by the Wall Street Journal.
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 U.S. government.
Outrage over the GM ignition switch case prompted a much tougher approach by Washington toward 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, who blamed the problem on a bureaucratic corporate culture that hid problems and failed to take action.
The problem caused crashes that killed at least 124 people and injured 275 more, according to lawyers in charge of a fund set up by GM to compensate victims. Families of those who died will get at least $1 million. GM has set aside $625 million to compensate people, and also faces multiple lawsuits from the problem.
In May 2014, National Highway Traffic Safety Administration levied a record civil penalty of $35 million against GM. It said the company violated federal law when it failed to notify the government of safety-related defects within five days of learning about them. NHTSA said GM also failed to respond in a timely manner to the government's requests for information during its investigation of the defective switches.
The deal with GM comes roughly a year and a half after Toyota agreed to a $1.2 billion penalty from the Justice Department, admitting that it hid information about defects that caused Toyota and Lexus vehicles to accelerate unexpectedly and resulted in injuries and deaths. The Justice Department said at the time that it was the largest penalty of its kind ever imposed on an auto company.
GM's fine is likely to be less than Toyota because the company cooperated with the investigation, according to legal analysts.