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Tuesday, September 22, 2015

Getting away with more than 100 murders

By Phil Mattera, Dirt Diggers Digest
The famous statement from the 1950s to the effect that what was good for General Motors was good for the country needs to be updated.

Based on a settlement just announced by the Justice Department, we should be saying: what is good for GM is good for Mary Barra and bad for the country.

Barra, the chief executive of the automaker, and the company’s other top executives are celebrating the fact that they were able to negotiate a deal with federal prosecutors that contains no charges against individuals in connection with the failure to disclose a safety defect that has been linked to more than 120 deaths.


This came just a week after the adoption of a new policy by Justice that was supposedly going to make sure that individuals, including high-level executives, are targeted in major cases of corporate misconduct. 

That policy states that companies are not supposed to receive cooperation credit (lighter penalties) unless they hand over evidence relating to actual persons. Yet GM apparently got such credit.

What’s even more shocking about the GM deal is that the company did not have to enter a guilty plea on the criminal charges that had been brought against it. Instead, it was given the opportunity to enter into a deferred prosecution agreement — the widely criticized practice of letting a company buy its way out of legal jeopardy by promising to be good in the future.

The Justice Department was supposedly moving away from what had become virtually automatic use of this device in cases involving large corporations. The GM deal diverges from the guilty pleas that had been extracted in several cases such as those involving major banks such as Citi and JPMorgan Chase.

Finally, the settlement is a disappointment because the amount of the penalty extracted, $900 million, is hardly punitive for a company of GM’s size and is well below the $1.2 billion Toyota had to pay to resolve similar charges last year.

An unwillingness to come down hard on large corporate malefactors is all too common, but what sets the GM case apart is that it is one of those rare instances in which the misconduct has been directly linked to many deaths. 

The automaker was, in a sense, being accused of murder — actually, of being a serial killer. And real people were involved in the irresponsible decisions that led to those deaths.


Yet GM was offered a deal that is the equivalent of probation and a fine, while its executives did not even get a slap on the wrist. 

If a street murder case were resolved with such light punishment, the prosecutor would be tarred and feathered. But when it comes to corporate crimes — and crimes involving corporate executives — the rules are very different.