75% of Taveras made in May flout emission norms: Probe

Written by Roudra Bhattacharya | New Delhi | Updated: Oct 23 2013, 09:55am hrs
Around 75% of the Tavera MPVs made by General Motors India (GMI), as recently as May this year, were non-compliant with the countrys emissions standards, according to a report by a three-member government panel tasked with ascertaining if the US-based automaker had been misleading government agencies on compliance since 2005.

The report, submitted on Monday, has found GMI guilty of corporate fraud, and says the act took place in complete knowledge of the top management, both past and present.

An official of the ministry of road transport told FE that current senior GMI officials, and those who have moved on to other companies, could face criminal or civil charges after the 300-page report is completely reviewed.

A decision is expected in a week, after consultation with the department of heavy industries. GMI is also likely to face a penalty of about R11 crore under the central motor vehicle rules of the motor vehicles act, 1988.

There is some evidence in the report such as communications made by the company and the representations made by other agencies including legal auditor J Sagar Associates. We are examining that and have to decide what the consequences are. There may be corrective measures and civil and criminal liabilities could follow. The previous management has been questioned through email and of course they can be penalised, the road transport official said.

Added a heavy industries ministry official, The fact that the issue was spread over many months and the company itself chucked out 20 people points out that many senior officials were involved. Corporate fraud is an IPC offence. We will now see how to streamline the testing procedures.

Top GMI officials who have since left the company include Karl Slym (managing director; 2007-2011) and Ankush Arora (marketing head; 2006-2010) both of whom are now with Tata Motors, and Rajeev Chaba (managing director 2005-2007). When contacted over email, Tata Motors declined comment.

GMI had a compliance problem right from the beginning because of falsifying of data. Pre-tested engines were supplied to government testing agency ARAI, so there was no way for the testing agency to know what was wrong. The probe started in August, and then GM was asked to supply a sample of 20 Taveras made in May 2013. About 75% were found to be non-compliant, said a government official who has reviewed the report.

GMI, which had initially reported the internal malpractice in July this year to the ministry of road transport, had later fired around 20 company officials including CFO Anil Mehrotra and other senior members of its technical team.

The company also recalled 1.14 lakh units of the Tavera MPV, which was among the largest auto recalls in the country till date. Government officials had indicated that the cost of the entire recall exercise and lost sales for over two months could add up to around R500 crore for GMI.