 "GM penalty hinges on states' probe: Tavera recall")
After the enquiry, the government would decide on the penalties to be imposed on the multinational company.
A government-instituted panel has already probed the action by GM in refitting pre-approved engines on the Tavera models sent for government inspection for emission norms. It gave a report last month, holding the company responsible for corporate fraud. The panel said top management personnel, including chief executive officers and managing directors who headed the company between 2005 and 2012 were involved, and were fully aware of the violations.
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A senior official in the ministry of road transport and highways said, “A meeting was held today (Friday) to discuss the report by the panel (headed by Nitin Gokarn, head of the National Automotive Testing and R&D Infrastructure Project). It was decided the state governments would probe and submit a report, based on which action would be taken against the company.” GM has two manufacturing facilities, in Gujarat and Maharashtra.
“It is a proven case of corporate misdemeanor. There will be a financial penalty. But if the road transport ministry, after reviewing the report, thinks there is individual culpability as well, it can instruct the state governments concerned to initiate police investigations against the senior leadership for fraud, cheating and personal gain,” a top government official had told Business Standard. GM India might have to face a penalty of up to Rs 11 crore under the Central Motor Vehicle Rules for misrepresenting emissions data to the Automotive Research Association of India.
The company has had four leadership changes in the period of recall between 2005 and 2013. Aditya Vij led the company from August 2000 for about five years. He was replaced by Rajesh Chaba, who held the mantle from June 2005, prior to Karl Slym assuming charge as managing director and president in October 2007. Slym headed the company for four years, before moving to Tata Motors as MD. The company is now under the stewardship of Lowell Paddock in India. Sources said Paddock had told the probe panel that it was because of him that the irregularities were unearthed. GM globally is said to have dismissed at least 25 employees, including Sam Winegarden, vice-president for global engine engineering and Anil Mehrotra, the chief financial officer in India. Rajesh Chaba was also dismissed.
Went an earlier GM statement: “We determined there was an emissions problem. We investigated it and identified violations of company policy. We developed a solution to the emissions problem and recalled the vehicles to serve our customers. We held people accountable. We advised the Indian authorities. Beyond that, we are not able to comment.”
Government officials conceded that during the investigation, the company acknowledged tampering of the conformity of production (COP) processes and type approval of Tavera's BS-III and BS-IV variants. They added that once the company realised its engines were not consistent in meeting emission norms, the pre-selected and tested engines were fitted to vehicles that were sent to government agencies for testing. The three-member committee headed by Gokarn to probe the case has recommended tightening of regulatory norms to prevent recurrence of such incidents.
It has said the government should monitor recalls randomly, to find if proper rectification is being done. And, for random checks on samples from dealers, instead of on manufacturing facilities. Also, that the notification of the COP date be fixed by the testing agencies; companies should have no role in this.
At present, the date of taking samples for testing is decided mutually by the testing agency and the manufacturer, resulting in the possibility of collusion. The committee has said that in case of non-compliance, the type approval should be withdrawn.