Tavera recall probe: Will Tata Motors' Karl Slym pay a price?

The government's investigation into the recall of 1.26 lakh Taveras by General Motors has a few shocking findings.

The probe committee, constituted by the government, has found out that company officials had been party to the fraud and has recommended slapping a penalty on GM, said a report in The Times of India today.

The company had in July voluntarily recalled its multi-purpose Chevrolet Tavera BS-3 (2.5L variant) and BS-4 (2.0L variant) manufactured during 2005-13. GM had said the recall was "to address emissions and specification issues".

It had offered to repair the recalled vehicles free of charge at its 280 dealerships in the country.

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[caption id="attachment_1081107" align="alignleft" width="380"] During the period the fraud happened, General Motors India had three managing directors: Rajeev Chaba, Karl Slym and Lowell Paddock. Reuters[/caption]

The government constituted the three-member committee to look into the matter after it was revealed that company officials had misrepresented the emission data by fudging the engines sent for emission checks.

"It is a case of corporate fraud with full knowledge and involvement of top GM management from 2005 onwards," a report in the Hindustan Times quoted from the probe report submitted to the government on Monday.

The probe committee has also said that only the company is liable as the non-compliance only benefits the firm, the HT report said.

During the period the fraud happened, General Motors India had three managing directors: Rajeev Chaba, Karl Slym and Lowell Paddock.

Rajeev Chaba, who later became vice-president - sales, was among the 25 officials, who were asked to leave the company after the fraud came to light.

Paddock is currently MD. According to the ToI report, he has claimed before the panel that it was he who blew the lid off over the fraud. Karl Slym is now managing director, Tata Motors.

The HT report says both Tata Motors and GM have not commented as the probe report is not yet public.

The company has admitted to the probe panel that it flouted the compliance of production norms, which mandates that vehicles and components produced should match the specification, performance and requirements that the testing authority approves.

The probe panel has found that the company replaced untested engines with tested ones while sending for checks by the testing authority.

It has also recommended steps to prevent the recurrence of such frauds in future. As per the ToI report, it has suggested that a system should be put in place do random checks of vehicle samples with dealers too. It has also said that the testing authority, and not the company, should notify the date on which the approval was given.

However, none of the report mentions how much will GM penalty have to pay for the fraud. An earlier report in the Financial Express had said the recall will cost the company about Rs 500 crore. This included repair work (Rs 285 crore), lost sales during June and July (Rs 200 crore) and penalties (just Rs 11 crore).