As we previously commented when it comes to justice, there are those companies that have been bailed out by the US Government, and then there is everyone else. Case in point, GM, which last Thursday was fined $900 million for covering up its faulty ignition switches that caused at least 124 deaths and hundreds of injuries.
The deal with GM was cut by U.S. Attorney for the Southern District of New York Preet Bharara, who said there’s no federal criminal penalty for knowingly putting a deadly product on the market. "It has been a challenging case, for the agencies, for the prosecutors and for me," Bharara said.
As a result, nobody was prosecuted by the US government.
"I don’t understand how they can basically buy their way out of it," Margie Beskau, whose daughter Amy Rademaker was killed in an October 2006 crash, told the Times. "They knew what they were doing and they kept doing it."
"So much for the Justice Department’s new strong policy on individual prosecution,” University of Maryland Law Professor Rena Steinzor told Corporate Crime Reporter. “This settlement is shamefully weak. A GM engineer knew about the fatal defect even before the first car rolled off the line. He secretly changed the part in 2005 but left hundreds of thousands of cars on the road with the bad switch. GM lawyers conspired to delay the recall. Much harsher penalties and individual prosecutions are warranted. The deferred prosecution is a toothless way of approaching a very serious problem.”
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And then there is Volkswagen, which earlier today took out a record charge of €6.5 billion, one which many think will be insufficient before all it set and done, following its own snafu involving manipulating emissions tests to make its cars appear "cleaner" than they were.
Yes, GM killed people, but Volkswagen killed the air!
While one can debate whose crime is greater, it is quite clear that the punitive damages so far are orders of magnitude apart.
Why? This is precisely what Volkswagen executives, many of whom will lose their jobs in the coming days, are scratching their heads over.
We would like to take this opportunity to explain to them "how it is done" in the US.
How does Volkswagen stack up?
To summarize Volkswagen's biggest mistake: it was not poisoning the environment, it wasn't even getting caught. It was this:
