NEW DELHI: A government-appointed panel to investigate General Motors India’s recall of over 1.26 lakh Chevrolet Tavera vehicles has held the company responsible of committing “corporate fraud” and said its top management — including CEOs and managing directors — from 2005 to 2011-12 were involved in this.
In its report submitted to the road transport and heavy industry ministries, the three-member panel recommended imposition of penalty, apart from a systemic clean up to avoid recurrence of similar incidents in future. Although action has been suggested against the company as well as executives involved, the level of penalty has not been specified.
The committee was set up to probe if the auto major had a role in violating the engine testing norms after it issued what was then the largest ever recall for flouting the compliance of production (COP) norms. Under COP, companies have to produce vehicles and components that exactly match with the specification, performance and marking requirements approved by the testing agencies. GM India did not comment, saying it had not seen the report yet.
Government officials, however, said that during the investigation, the company has acknowledged to tempering of COP and type approval of Tavera’s BS-III and BS-IV variants. They added that once the company realized that their engines were not consistent in meeting emission norms, the pre-selected and tested engines were fitted to vehicles that were sent for testing by government agencies.
The panel, headed by Nitin Gokarn, CEO of National Automotive Testing and R&D Infrastructure Project (NATRiP), involved with testing, validation and R&D, has given a clean chit to the testing agency — Indian Automotive Research Association of India (ARAI).
Government officials said that the probe panel could not interact with nearly 20 executives who were asked to leave GM after the irregularities came to light. “However, those sacked can’t be singled out since the violation of COP norms benefitted the company and not only a few senior and junior executives,” said an official, requesting anonymity.
During this period, the seven year period up to 2011-12, GM India had three MDs – Rajeev Chaba, Karl Slym, who is now with Tata Motors and Lowell Paddock, the current president and MD. Sources said that Paddock has told the probe panel that it’s only because of him GM unearthed the irregularities and reported it to the government.
The committee has recommended that now the government should monitor recalls to randomly find out if the proper rectification is being done. To prevent such frauds in future, the panel has recommended measures including random check on samples from dealers, instead of manufacturing facilities. It has also suggested that the notification of COP date should be fixed by the testing agencies and companies should have no role in this. At present, the date of picking up samples for testing is decided mutually by the testing agency and the manufacturer, resulting in the possibility of collusion.
The panel has also recommended that COP process should begin from the start of production and this should be for the entire vehicle instead of confining it to auto parts. The committee has said that in case of non-compliance, the type approval should be withdrawn.