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GM probed over ignition defect

Federal authorities were investigating whether General Motors (GM) hid an ignition defect when it filed for bankruptcy in 2009, The New York Times reported on Saturday.

The Justice Department’s investigation of the car maker included a probe into whether it had committed bankruptcy fraud by not disclosing the ignition problem, an unidentified source told the Times on Friday, the paper said.

Authorities are also investigating whether GM understated the defect to federal safety regulators.

The ignition switch problems led to the recall of 1.6 million vehicles last month.

GM could not comment specifically on the investigation, spokesman Greg Martin said on Saturday. The investigation was being run by FBI agents and federal prosecutors who worked on the fraud case against Toyota, the paper said.

On Wednesday, GM was hit with a lawsuit demanding that it be held liable for allegedly concealing ignition problems before its 2009 bankruptcy.

GM is a different legal entity from the one that filed for bankruptcy. But the proposed class action said plaintiffs should be allowed to sue over the pre-bankruptcy actions “because of the active concealment by Old GM and GM”. – Reuters

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