GM ousts 15 employees over ignition-switch scandal

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WARREN, Mich. — General Mo­tors said Thursday that it has forced out 15 employees for their role in the deadly ignition-switch scandal, as an internal investigation blamed the debacle on engineering ignorance and bureaucratic dithering, not a deliberate cover-up.

GM took more than a decade to recall 2.6 million cars with bad switches that are now linked to at least 13 deaths by its count. Trial lawyers suing the company put the death toll close to 60.

“Group after group and committee after committee within GM that reviewed the issue failed to take action or acted too slowly,” Anton Valukas, the former federal prosecutor hired by GM to investigate the reason for the delay, said in a 315-page report. “Although everyone had responsibility to fix the problem, nobody took responsibility.”

GM CEO Mary Barra said more than half the 15 employees forced out were senior legal and engineering executives who didn’t disclose the defect and were part of a “pattern of incompetence.” Five other employees have been disciplined, she said. She didn’t identify them.

GM will establish a compensation program covering those killed or seriously injured in the more than 50 accidents blamed on the switches. The amount of money that will be made available was not disclosed.

Barra called the report “brutally tough and deeply troubling.”

The report lays bare a company that operated in “silos,” with employees who didn’t share information and didn’t take responsibility for problems or treat them with urgency. Valukas also portrayed a corporate culture in which there was heavy pressure to keep costs down, a reluctance to report problems up the chain of command, a skittishness about putting safety concerns on paper, and general bureaucratic resistance to change.

He described what was known as the “GM nod,” in which “everyone nods in agreement to a proposed plan of action but then leaves the room and does nothing.”

Valukas exonerated Barra and two other top executives, Mark Reuss, the chief of global product development, and general counsel Michael Millikin, saying there is no evidence they knew about the problems any earlier than December.

Deep within the company, engineers and others believed the ignition switch flaw was an inconvenience, a “customer satisfaction” issue rather than a safety problem, the report said. Engineers were trained not to use words such as “dangerous” or “defect” when describing problems in writing, which contributed to the lack of urgency in dealing with the problem, Valukas wrote.
In addition, some workers told Valukas that they did not take notes at safety meetings because they believed GM lawyers didn’t want a paper trail.

In 2005, according to documents supplied recently to Congress, GM failed to make a repair of the switch that would have cost just 57 cents.

In his report, Valukas said he found no evidence that any employee made “an explicit trade-off between safety and cost” in dealing with the switch. But he said there was “tremendous cost pressure” at GM at the time, and he left open the possibility that it influenced the automaker’s handling of the problem.

The report could hurt GM in legal proceedings and complicate matters for lawyer Kenneth Feinberg, the compensation expert hired by GM to settle some of the many lawsuits, said Carl Tobias, a law professor and product liability specialist at the University of Richmond in Virginia.

But plaintiffs’ lawyers already know most of what’s in the report from depositions in previous cases, and Valukas was “careful not to open too much liability exposure,” Tobias said.

Under a judge’s order, GM is shielded from legal claims from before it emerged from bankruptcy in 2009, and company officials wouldn’t say Thursday whether they will use that protection against death and injury lawsuits. Lawyers are trying to overturn the shield, alleging GM deceived the judge.

Barra, who took over as CEO in mid-January, didn’t directly answer a question about whether she should have figured out the switches were a deadly problem. Before the took the top job, she was product development chief for three years, and safety reported to her through GM’s chain of command.

“I wish I had known, because the minute we knew, we took action,” she said.

Sen. Richard Blumenthal, D-Conn., criticized the investigation as “the best report money can buy.”

“It absolves upper management, denies deliberate wrongdoing and dismisses corporate culpability,” he said.

Barra said Valukas interviewed 230 employees and reviewed 41 million documents to produce the report, which also makes numerous recommendations for handling safety problems more effectively.

Barra has already named a new safety chief and pledged to work quickly through a backlog of potential recalls. As a result, the automaker has recalled a record 15.8 million cars and trucks in North America so far this year.

In addition, GM has put procedures in place to make sure that departments communicate and that safety issues get reported to the top. Barra said people who don’t think such problems are being addressed should contact her.

Barra, who testified on Capitol Hill in April but deflected many questions by saying she was waiting for the results of Valukas’ investigation, is certain to be called back.

Sen. Claire McCaskill, D-Mo., said she intends to hold a hearing this summer.

“I won’t be letting GM leadership, or federal regulators, escape accountability for these tragedies,” she said in a statement. “The families of those affected deserve no less.”

Barra, a 34-year GM veteran, told 1,000 employees gathered at the automaker’s suburban Detroit technical center that the report was “enormously painful.”

“I want you to never forget it,” she said in a speech that was also broadcast to the company’s 212,000 employees worldwide.

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jimmymac
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jimmymac 06/06/14 - 09:19 am
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GM
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Problems start at the top so unless heads roll from the top down this is all a sham.

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