Justice Dept. Assails VW as Barra is Elevated to GM Chair

The Obama Administration’s Justice Department is now suing Volkswagen for “up to $90 billion for allegedly violating environmental law.” Politically-favored General Motors was fined $900 million, or 1% of that amount, for covering up an ignition switch defect that led to the deaths of at least 124 people. At last count, the number of people who lost their lives as a result of emissions' tampering by VW stood at zero.

Meanwhile, the GM board unanimously elected CEO Mary Barra as its Chairman, demonstrating that it is still not independent of political influences, even years after the 2009 bankruptcy process.

Barra was in charge of quality control during the time that GM was hiding its deadly ignition switch defect. She became CEO while the company continued to cover up the extent of a problem that was putting motorists' lives at risk. Barra repeatedly evaded and misrepresented in public statements, and in sworn testimony to Congress. During her tenure as CEO at GM, share price has underperformed the broader S&P 500 index by about 30%. The board of most other public companies in the United States would have considered firing her long ago.

Barra's politically-popular stature will enable her to continue to serve as CEO. The trend in recent years has been to separate the Chair and CEO, GM is doing exactly the opposite. So much for corporate governance.

Maybe the fact that the Justice Department is trying to punish VW to the tune of $90 billion for emissions tampering while giving GM a slap on the wrist for an offense that caused the deaths of over a hundred innocent victims should not come as a surprise. After all, this is an Administration that has characterized global warming as a greater threat than radical Islamic terrorism. But it is more likely that plain old politics is driving this travesty.

Let’s face it, GM is a crony corporation of Team Obama. GM received tens of billions of taxpayer dollars in the auto bailouts and later the President’s political allies in the UAW (who were favored in the payout) came out in force to help the President win a second term in office. VW, on the other hand, to date has not allowed the UAW to muscle their way into US operations. It seems like the UAW’s powerful Executive friends will now strike a blow to VW. It has been said that “the enemy of my enemy is my friend.” In the case of the politicized US auto industry it appears that the enemies of President Obama’s cronies are his enemies.

The Obama Administration’s law enforcement and regulatory entities (NHTSA has become a joke in its failures to enforce recalls of defective vehicles manufactured by crony GM) are blatantly biased as they neglect their obligation to serve the entire public. The latest attempts to harm VW — which directly employs more than 3,200 in Chatanooga, TN and indirectly employs more than 9,500 working for suppliers —  with excessive fines is a clear example of a gangster Administration that threatens or punishes anyone deemed an adversary while protecting or rewarding those deemed as allies.

As an ex-GM bondholder, I saw how the political process played out when the Obama-orchestrated GM bankruptcy process safeguarded the interests of the politically-favored UAW while less-favored groups like bondholders (along with the taxpayers that footed the bill) were made to pay. President Obama has been emboldened by the publics’ allowance of Executive abuse. Americans should question the Justice Department’s motivation as it now appears to have VW in its sights for political reasons. Allowing and ignoring such travesties of justice leads to our government growing in their efforts to pick winners and losers, and if you are not one of the cronies you may just end up on the list of losers.

Mark Modica is an NLPC Associate Fellow.