The penalties are getting bigger

Justice-Department-announce-Toyota-fine

Laws are laws and there to be enforced. Except over the last twenty years, there’s been little appetite to enforce many of the laws against the larger corporations. The federal and state authorities have preferred to give the companies no more than token penalties if they were too obviously caught in the wrong. Then a few crusading DAs began to take on some of the big boys. Slowly this has changed the landscape so that, as the Democrats continue in power, more prosecutions are being brought by federal authorities. It’s still a long way from making the corporations genuinely accountable, but it’s a start in the right direction.

The Justice Department has begun to show a little more gumption and has just announced a settlement deal with Toyota. You may remember it was suggested Toyota had been slow to draw attention to a problem in the design of some accelerator pedals and the carpeting under them. A few high-profile crashes changed that. The result is Toyota agreeing to pay $1.2 billion to make the criminal case disappear. This is a record amount for an auto manufacturer and it shows new ingenuity in the way the case was framed.

Instead of defining the case as one of a breach of the safety laws, the Justice Department chose to allege Toyota actively misled American consumers about the safety of the vehicles on sale. You may also have noticed General Motors has just announced a second recall bringing the total number of vehicles affected to more than 3 million. When its CEO was making her mea culpa, she formally admitted the ignition switch problem has been around since 2001. GM itself admits thirteen deaths were caused by this problem. Other independent safety experts have suggested the real number may be over three-hundred.

Many would like to see individual directors prosecuted when they were responsible for the faulty design or the failure to correct a problem when it was detected. None of the directors at Toyota were charged, but the company is effectively on probation with an independent monitor installed to ensure the company maintains a higher standard in future.

Since the Justice Department is running a probe into GM, we may perhaps look forward to a penalty of comparable size. If anything, this failure is more egregious than that of Toyota. Since 2001, GM has yet to design and manufacture replacement ignition switches. Given the Motor Vehicle Safety Act of 1966 requires manufacturers to notify the public on a timely basis, there’s a clear breach of the law. Directors should really go to jail as a warning to all working in industries where safety standards should be maintained at the highest levels. Protection of the public should be the priority and if a few while collar executive have to go to jail to get this message across, it should happen tomorrow.

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