On Wednesday of last week, the Justice Department announced with great fanfare that they were changing their policy on letting corporate executives walk away scot-free without criminal charges.
On Wednesday of this week, the Justice Department announced it will let every executive of General Motors (GM) walk away scot-free with no criminal charges for defrauding consumers and misleading regulators on a faulty ignition switch that killed over 120 people.
Was the promise of reform at DOJ a lie or did the criminals at GM just beat the buzzer?
Due to some legal absurdities and corporate maneuvering related to the company’s 2009 bankruptcy, GM is not civilly liable for the lives its fraudulent conduct ruined and ended. But the company has had to offer some restitution to save what is left of its reputation.
In order for that effort to have credibility, GM went outside the company and hired renowned jurist Ken Feinberg who revised the number of deaths caused from the ignition switches up from 13 to 124 and developed a compensation structure for victims. GM also had to issue a recall order for 2.6 million of its cars
The deal reached between DOJ and GM includes a $900 million penalty and a three year deferred prosecution agreement. The deferred prosecution agreement will be reinforced by the corporate entity known as GM — not any actual people — being criminally charged and, in the event GM does not comply with the agreement, the criminal charges will go forward and the deferred prosecution agreement dropped.
But if GM complies with the deferred prosecution agreement for the three years it is in force, the criminal charges disappear. It is a great deal for GM and a terrible outcome for the maimed victims and the families of those killed who know the executives that deceived customers and regulators will not face justice.