General Motors has agreed to pay a record $35 million penalty for delays in reporting flaws in ignition switches that have led to at least 13 deaths, the Department of Transportation announced on Friday.
Apart from the maximum civil penalty, the automaker has agreed to “unprecedented oversight” as a result of an investigation by the National Highway Traffic Safety Administration into the recall of 2.5 million vehicles.
The NHTSA administration said the fine is the “single highest civil penalty amount ever paid as a result of a NHTSA investigation of violations stemming from a recall.”
“What we will never accept is a person or a company that knows danger exists and says nothing,” U.S. Secretary of Transportation Anthony Foxx said at a press conference. “Literally, silence can kill.”
“GM did not act and did not alert us in a timely manner. What GM did was break the law. They failed to make their public safety obligations."
As part of the deal, the government “ordered GM to make significant and wide-ranging internal changes to its review of safety-related issues in the United States, and to improve its ability to take into account the possible consequences of potential safety-related defects.”
“GM did not act and did not alert us in a timely manner. What GM did was break the law. They failed to make their public safety obligations,” Foxx said. He emphasized that the deal also looks forward to the future in ensuring the safety of GM vehicles on the road.
While the fine was historic, for a company as large as GM, "$35 million dollars is a rounding error," Foxx said. When asked where the money from the fine will go, a Transportation official responded that it would go into the "general treasury."
Other automakers and parts manufacturers should take a clear message from the agreement that delays in reporting safety defects will not be tolerated, said National Highway Traffic Safety Administration's Acting Administrator David Friedman.
While the agreement reached with the company concludes NHTSA's investigation into the timeliness of GM's recall, the agency will continue to oversee the recall. NHTSA officials said on Friday that their review of the company has found "systemic" issues regarding how information was shared and the recall unfolded, and that it was "hard to point to one single fault."
The company found a way to fix the switches almost a decade ago but didn't because of a "business decision," NBC News reported.
“The defect resulted in the non-deployment of airbags in certain Chevrolet Cobalt and other GM models,” the DOT said in the release on Friday.
As part of the deal with the government, GM has agreed to give NHTSA complete access to the results of the company’s own internal investigation. Testifying before a Senate hearing, GM chief executive Mary Barra denied charges of a “culture of cover-up” at GM, and said the company would not take action until its internal review was complete.
In a statement responding to the DOT deal, GM said it was working with NHTSA and has begun reviewing its policies “to avoid future recalls of this nature.”
"What we will never accept is a person or a company that knows danger exists and says nothing."
“We are working hard to improve our ability to identify and respond to safety issues,” said Jeff Boyer, vice president of Global Vehicle Safety, who is assigned to integrate safety policies across the company.
The Transportation Department is pushing Congress to raise the maximum fine they can impose on automakers to $300 million under the GROW AMERICA Act.
GM reported a first-quarter net profit of $125 million, after writing off $1.3 billion related to the recalls. Without the charges, GM said its North American earnings alone were up $500 million, year-over-year.
GM confirmed in late April that it is under investigation by the Securities and Exchange Commission, Justice Department, and U.S. Attorney’s Office in New York, in connection with the ignition switch recall.
A press release from GM on Friday said that the company will have enough replacement parts by October to fix the “majority” of the vehicles recalled for flawed ignition switches and ignition cylinders.
On Thursday, the company announced that was issuing five recalls covering 2.7 million vehicles in the U.S. The recalls included one for more than 2.4 million vehicles, and was connected to malfunctioning taillamps, according to a GM statement.
-- CNBC's Phil LeBeau and NBC News' Patrick Rizzo contributed to this report.
First published May 16 2014, 6:22 AM