The Justice Department announced Thursday that General Motors will pay a $900 million criminal fine, and agree to federal oversight, as a result of an ignition switch defect on millions of its vehicles.
But the real financial toll to GM is much higher - more than $2 billion, when criminal, civil, victim settlements and the cost of fixing cars are factored in.
And, according to the Justice Department settlement, it stems in large part because GM officials below the senior management level skirted federal requirements for reporting defects and recalling vehicles in a timely fashion.
Nick Bunkley, a reporter with Automotive News, made a list of the numbers.
#GM ignition-switch expenses: $625M for compensation fund +$900M DOJ fine +$575M civil settlement +other settlements +actual cost of recall
— Nick Bunkley (@nickbunkley) September 17, 2015
Bunkley calculated that the fine is equal to about $7.3 million per each of the 124 deaths in the ignition switch defect case.
In addition to the $900 million fine, GM announced Thursday that it will take a $575 million charge against third quarter earnings, reflecting the civil settlement.
An attorney for accident victims, Bob Hilliard, said about 84 death cases and 370 injury cases would still be litigated, even if the settlement is approved.
A vivid paragraph of the Justice Department documents in the case succinctly spelled out what GM did.
"GM admits and stipulates that it failed to disclose to its U.S. regulator and the public a potentially lethal safety defect that caused airbag non-deployment in certain GM model cars, and that GM further affirmatively misled consumers about the safety of GM cars afflicted by the defect."
Justice went on to say that after it was clear the switches were defective in spring 2012, GM did not correct an earlier assurance that defective switches caused no "safety concern," nor did it recall the vehicles.
Instead, it took the matter "offline" from the usual recall process, so that it could "buy time to package, present, explain and manage the issue."
That multi-billion dollar mistake presumably happened without the knowledge of senior GM management, including then-CEO Dan Akerson. He said he was not aware of the issue and that company leaders "didn't fully realize how deep some of the problems ran," according to the Detroit News.
GM's current CEO, Mary Barra, has said she only learned something was amiss in late 2013, shortly before she replaced Akerson as CEO.
Barra, who has apologized and discussed the ignition situation on numerous occasions, including multiple appearances before Congress, fired 15 GM employees in the wake of the scandal.
However, the Justice Department did not levy charges against any individuals in the GM case.
While GM's financial health is strong, six years after its federally directed bankruptcy and bailout, the $2 billion plus cost of the situation is money GM could have spent in other ways.
That's about the expense required for a major assembly complex, and it also would pay for the development of two new car or truck programs.
At a time when global automotive competition has never been more fierce, GM has found out the heavy toll of an employee coverup.
