Did GM violate US anti-corruption law in India?

HT Correspondent, Hindustan Times
Washington
First Published: 12:26 IST(1/11/2013)
Last Updated: 12:43 IST(1/11/2013)
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For a company that remains on government dole, could General Motors have gotten away with switching engines in its vehicles to fudge emission tests in the US?

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Unlikely. Not in a nation where auto makers have had to recall millions of vehicles on mere rumours, as it happened with a Japanese car maker between 2009 and 2011.

There were no indications yet if the Detroit-based company was voluntarily investigating possible violations of the Foreign Corrupt Practices Act (FPCA) at its India subsidiary.

It was also not clear if it was being investigated by the authorities. The US department of Justice refused to either deny or confirm that the company was being probed.

The US government still owns a part of the company —close to 7.3% — as the result of the infusion of cash in 2009 to protect it from going bankrupt.

A government-appointed panel in India concluded last week a “fraud” was carried with “full knowledge and complicity” in manipulating emission tests to comply with law.

GM India recalled over 1.14 lakh Chevrolet Taveras —one of the largest vehicle recalls in the country till date — manufactured between 2005 and 2013 for failing to meet emission norms.

“This is a fit case of investigation under the (FPCA) statute,” said a lawyer, who insisted on not being identified.

The law, which punishes foreign bribery, inaccurate financial records and inadequate control, is enforced by the US Department of Justice and the US Securities and Exchange Commission.

“The US justice department has a longstanding policy to neither confirm nor deny whether a matter is under investigation,” wrote Peter Carr of the department in a mail. “So I’m unable to provide any answers for your story.”

And the company believes it has done enough for now.

“We have determined there was an emission issue, we have investigated it and identified violations of the company policy.  We developed a solution to the emissions problem and recalled the vehicles to serve our customers,” said P Balendran, vicepresident, corporate affairs, GM India.


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