GM India Found Guilty of Corporate Fraud by Indian Government Panel

India

General Motors Co.’s (NYSE:GM) India division has been found guilty of committing corporate fraud by a government-appointed panel, which is holding the unit’s top executives responsible for the infractions, according to a report from the Times of India.

The charges relate to 114,000 of the company’s Tavera SUVs that were recalled in July after it was found they violated the country’s emissions standards. The Tavera recall was one of the largest-ever automobile recalls in India. General Motors restarted the production of the vehicles over the weekend, a company official told Reuters on Saturday, and now information about the Indian government’s report on GM India’s violations is starting to come out.

The government report accuses GM India’s top executives between 2005 and 2012 of knowledgeably violating engine testing and compliance of production norms. A senior government official who has seen the report told Reuters that “It says only the OEM (original equipment manufacturer) was responsible for whatever happened,” and GM India could be fined $1.6 million for the infractions.

According to the Hindustan Times, GM India admitted to refitting noncompliant engines with engines that were already approved, leading to Tavera vehicles on Indian roads that didn’t meet the country’s emissions standards. GM India found out about the infractions through an internal probe and fired several executives as a result, including Chief Financial Officer Anil Mehrotra.

“We determined there was an emissions problem,” GM India said in an emailed statement to Reuters on Tuesday. “We investigated it and identified violations of company policy. We held people accountable. And, we advised Indian authorities. Beyond that, we’re not able to comment as we’ve not heard from the government or seen the report.”

General Motors has already been struggling on the Indian market. On October 1, the company reported that sales in India for September declined 5 percent year over year, selling 7,048 vehicles this September versus 7,403 vehicles in September 2012.

GM India Vice President P. Balendran said that the halted production of the Tavera contributed to the decline. “The market continues to remain depressed due to weak economic conditions, negative market sentiments and various other factors. Although we have generated volumes for the Beat as expected, our overall sales figures are not on the expected lines as we had temporarily stopped the production and sale of Tavera,” he said to Reuters.

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