Should Execs Who Cover Up Faulty Products Go to Prison?

By: CBS MoneyWatch
By: CBS MoneyWatch

July 16, 2014

CBS MoneyWatch - With the ever-widening crisis at General Motors over faulty -- and deadly -- ignition switches, a new bill has been introduced that's aimed at curbing similar problems.

U.S. Senators Richard Blumenthal (D.-Conn.) and Bob Casey (D.-Pa.) on Wednesday introduced the Do No Harm Act of 2014, which would make it a crime for any executive to conceal a defect sold by their company that poses the risk or death or serious injury. Executives who violate the law would face as many as five years of prison.

The bill's introduction comes on the eve of another Senate hearing about GM's defective ignition switches, with a focus on the accountability and corporate culture of the giant automaker. If such a law had been enacted earlier, the defective switches would have been disclosed earlier, and possibly even halted before the parts made their ways into GM cars, Blumenthal told The Detroit News.

"I think there is need for accountability and that message needs to be driven right to their desks.... (Auto execs) ought to feel that it's more than just an abstract concept," Blumenthal said.

GM may have kept quiet on fatal crashes linked to the defect, according to The New York Times. An investigation by the publication found that the company repeatedly failed to answer simple questions about what led to crashes, such as one that killed Gene Erickson as he was traveling in a Saturn Ion. GM told federal authorities it couldn't provide answers, even though a GM engineer had come to the conclusion a month earlier that the car had probably lost power, which disabled its air bags, the publication notes.

GM legal chief Michael Millikin will be on hand to testify at the Senate hearing on Thursday, as well as chief executive Mary Barra, who faced tough questions over the automaker's actions at an April Senate hearing.

The Hide No Harm Act would also require automakers to alert the National Highway Traffic Safety Administration within 24 hours if a defect poses the risk of death or serious injury. Under current law, automakers have five days.

The bill isn't limited only to automakers; any company would be required to alert the appropriate federal agency within 24 hours. Employees and any other individuals who could be impacted by the defect would need to be alerted "as soon as practicable."

GM, for its part, has admitted that it broke the law by failing to report the defect earlier. It was slapped with a $35 million fine, the maximum, earlier this year for failure to disclose the faulty switch.

The bill is gaining some support, with the advocacy group Coaltion for Sensible Safeguards urging other organizations to throw in their support for the measure. "This legislation will serve to ensure that when corporate officers make decisions regarding their operations and products that human life is valued over profit margins and bonuses," the group said in a statement.


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