G.M. Says Inquiry Finds No Cover-Up on Switch Flaw
By BILL VLASIC
In an internal investigation released Thursday, General Motors cited
bureaucratic problems and the failure of individual employees to address
a safety problem that it links to 13 deaths and 47 accid
WARREN,
Mich. — An internal investigation by General Motors found “a pattern of
incompetence and neglect” in its decadelong failure to recall millions
of defective small cars but concluded that there was no deliberate
cover-up, the company’s chief executive said Thursday.
Mary
T. Barra, the chief executive, said 15 employees had been dismissed,
most in senior and executive roles, and five others had been
disciplined. But despite the broad findings, the report did not tie Ms.
Barra and her top lieutenants to the recall delay that G.M. has linked
to 13 deaths and 47 crashes.
“Repeatedly,
individuals failed to disclose critical pieces of information that
could have fundamentally changed the lives of those impacted by a faulty
ignition switch,” she said. “If this information had been disclosed, I
believe in my heart the company would have dealt with this matter
appropriately.”
The
release of the internal investigative report was expected to be a
turning point in a safety crisis that has consumed General Motors since
Feb. 14, when the automaker began a broad recall of millions of small
cars equipped with defective ignition switches.
The
recall grew to cover 2.6 million cars. The automaker has said the
number of fatalities and crashes linked to the defect could increase as
it gathers more information.
But the recall was just the beginning of an escalating series of safety actions at G.M., including dozens of subsequent recalls of other vehicles.
General
Motors has also come under intense scrutiny for how and why it failed
to repair a defect that existed in its cars for more than a decade.
Ms.
Barra has consistently maintained that she and other senior executives
first learned of the switch problems on Jan. 31 — the day that an
internal safety committee ordered the initial recall.
“We will hold ourselves accountable,” Ms. Barra told employees in an email on March 4, her first public comments on the issue. Six days later, G.M. hired Mr. Valukas, chairman of the law firm Jenner & Block, to investigate the long-delayed recall.
Since then, Ms. Barra has suspended two engineers
involved in the delay, ordered a reorganization of G.M’s vast
engineering department and appointed a vice president to oversee all
safety matters at the company.
Four
senior executives have also left since the recall, and Ms. Barra has
vowed to discipline or fire other employees found to be involved in the
failure to fix the switch.
But
Ms. Barra has steadfastly refused to answer detailed questions about
events leading up to the recall — including during her testimony at two
contentious congressional hearings in April — until Mr. Valukas
completed his report.
Legal
experts say that G.M. has taken a calculated risk that Mr. Valukas’s
findings and recommendations will sufficiently answer the myriad
questions hanging over the company.
“The
downside is that members of Congress, the press and the public may
think that the report lacks credibility if it is in an in-house
investigation,” said Carl W. Tobias, a law professor at the University
of Richmond.
But
Professor Tobias said that Mr. Valukas, a former United States
attorney, was a good choice for the delicate task of investigating G.M.
“His reputation is on the line with this report, so he is not likely to
sacrifice that for G.M.,” he said.
Jenner
& Block has long had ties with the automaker. In addition to
performing securities work for the company, one of Jenner & Block's
lawyers, Robert S. Osborne,
was G.M.'s general counsel from 2006 to 2009, years that the ignition
switch problem festered within G.M. And before that, Mr. Osborne was a
senior partner at Jenner & Block.
The
other firm involved in the internal investigation, King & Spalding,
defended G.M. in a wrongful-death lawsuit filed by the family of Brooke
Melton, a case that brought the ignition switch defect to light last
year.
After
G.M. first announced the switch recall, it gave a chronology of events
to federal regulators that showed a pattern of failure to address a
deadly defect. Eventually, the company admitted that it had been alerted
to the defect as far back as 2001, when it was still in development for
the Saturn Ion.
Since
then, G.M. said, it has conducted several in-house inquiries and
studies over the years of a faulty ignition switch installed in Ions,
Chevrolet Cobalts, and other small cars.
G.M.
received multiple reports over the past decade of vehicles suddenly
stalling when the ignition key was bumped by the driver or was weighed
down by other objects on the key ring.
Over time, the company learned that air bags could also be deactivated when the cars lost power.
It
was only after G.M. engineers were deposed in Ms. Melton’s lawsuit in
2013 that the automaker began to take action on the recall.
Ms.
Melton died in Georgia after the ignition in her 2005 Cobalt suddenly
switched off, she lost control of the vehicle and was hit by another
car.
An independent engineer hired by the Melton family discovered that the ignition switch had been significantly improved in later-model Cobalts, but that the new part had the same identification number as the previous, defective part.
The company’s chief switch engineer, Raymond DeGiorgio, testified in a deposition that he did not order a change in the switch.
But
internal documents later given to federal regulators showed that Mr.
DeGiorgio had, in fact, ordered a change in the switch in 2006. No
recall was ordered at the time, leaving drivers and passengers
vulnerable to death and serious injury in cars equipped with the
original switch.
G.M.
lawyers unexpectedly offered a confidential settlement in the Melton
lawsuit last September. Once the case was settled, the company restarted
its internal inquiry into the switch problems.
By
late last year, a safety committee had verified that the switch had
been upgraded in 2006, but that millions of defective vehicles remained
on the road. The committee then ordered the initial recall on Jan. 31.
The investigation by Mr. Valukas hardly concludes the crisis.
The National Highway Traffic Safety Administration has already levied a $35 million penalty
against G.M. for failing to report the defect in a timely manner, and
has required wide-ranging changes to the automaker’s safety practices.
G.M.
also faces another round of congressional hearings and a raft of
additional investigations, including those by the Justice Department and
the Securities and Exchange Commission.
Beyond
the investigations, the company is awaiting recommendations from the
lawyer Kenneth R. Feinberg on how it will compensate victims of
switch-related crashes and family members of people who died as a result
of the defect. G.M. faces hundreds of private claims and lawsuits.
Mr.
Feinberg, who oversaw compensation claims for victims of the 9/11
terrorist attacks and the Boston Marathon bombing, has said he would
make his recommendations to G.M. later this month.
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