February 26, 2015 / 5:57 PM / 4 years ago

Senate panel OKs auto industry whistleblower incentive

WASHINGTON (Reuters) - A measure that would offer financial incentives for auto industry employees to expose safety defects won unanimous backing from a U.S. Senate panel on Thursday.

The vote by 13 Republican and Democratic members of the Senate Commerce, Science and Transportation Committee sends the legislation, which would allow whistleblowers to share in auto company penalty payments, to the floor of the Senate.

The measure follows controversies over defective General Motors Co ignition switches and Takata Corp air bag inflators.

An aide to Senate Republican leader Mitch McConnell could not say when a vote might be scheduled. If brought to a vote and approved by the full chamber, the bill would move on to the U.S. House of Representatives for consideration.

Under the legislation, employees and contractors for automakers, parts suppliers and car dealerships could receive up to 30 percent of penalties resulting from a federal enforcement action totaling more than $1 million - if they share original information on product defects or reporting violations with the U.S. Transportation Department or Justice Department.

The Alliance of Automobile Manufacturers, which represents 12 carmakers including GM, said the bill could speed recalls by creating a new incentive for employees to report problems internally as well as to regulators. “That is a good outcome for vehicle owners,” alliance spokesman Wade Newton said.

Thursday’s vote follows revelations in two deadly auto product cases.

GM agreed to pay a $35 million fine last year over its delayed reporting of an ignition switch problem that has resulted in 379 death claims and thousands of injury claims.

Last week, the government slapped a $14,000-a-day fine on Takata for failing to fully cooperate with its probe of air bag inflators that have been linked to at least six deaths and dozens of injuries..

“This legislation will be a powerful tool to help ensure that problems regarding known safety defects are promptly reported to safety regulators,” the committee’s Republican chairman, Senator John Thune of South Dakota, said.

The bill was modeled after existing whistleblower protections that encourage individuals to share information with the Internal Revenue Service and the Securities and Exchange Commission, Senate aides said.

Reporting by David Morgan; Editing by Andre Grenon and Leslie Adler

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