Tag: mary barra
GM Excoriated For ‘Negligence’ At Latest Senate Hearing

GM Excoriated For ‘Negligence’ At Latest Senate Hearing

Washington (AFP) — GM officials came under attack at a Senate hearing Thursday from lawmakers who accused them of “gross negligence” that contributed to at least 13 deaths linked to defective General Motors cars.

While Mary Barra, the embattled chief executive of America’s largest automaker, returned for another congressional grilling, the man GM hired to determine the compensation for crash victims made his first appearance on Capitol Hill.

Compensation expert Ken Feinberg, who has said GM would offer at least $1 million for each death linked to faulty ignition switches in GM cars, assured lawmakers that the compensation fund had no limits.

“We are authorized to pay as much money as is required,” Feinberg told a Senate panel.

As lawmakers praised Feinberg’s independent work, they blasted Barra and GM chief counsel Michael Millikin for the company’s “culture of diffused responsibility” that prevented or shielded key executives from knowing about the years-long problem.

Lawmakers are investigating the company’s recall of 2.6 million cars that began only last February, 11 years after the company discovered ignition switch problems related to dozens of accidents and at least 13 deaths.

GM, which also is under federal investigation for the delayed recall, has been slapped with a $35 million fine and is facing potentially billions of dollars in compensation costs.

Senator Claire McCaskill, chair of the Commerce, Science, and Transportation Subcommittee, pointed to a series of “tragic management failures at General Motors,” as well as years of legal obfuscation that showed “indifference, incompetence and deceit” in one of the most serious safety crises in the company’s history.

“It is very clear that the culture of lawyering up and Whac-A-Mole (at the Detroit manufacturer) killed innocent customers of General Motors,” McCaskill said.

She expressed incredulity that despite at least four separate internal warnings beginning in 2010 that GM could face punitive damages over its ignition switches, Millikin knew nothing about the issue until the recalls were announced this year.

No pre-2014 filing was made to the Securities and Exchange Commission, nor was GM’s board of directors informed of the issue until this year, Millikin said.

“This is either gross negligence or gross incompetence,” McCaskill boomed.

– ‘People died’ –

An exhaustive and damning internal GM report found major shortcomings in the legal department, which has been accused of fighting lawsuits by accident victims in connection with the defective cars.

Fifteen employees were dismissed, but not Millikin.

“How in the world in the aftermath of this report did Michael Millikin keep his job?” McCaskill asked.

GM chief Barra reiterated that her company “accepted responsibility for what went wrong” and “we will do all we can to make certain that this does not happen again.”

The automaker, she added, would pay the compensation determined by Fineberg as soon as possible. Feinberg has until the end of this year to gather claims in the case.

But when Barra sought to lay out the steps taken to assure that the information problems not happen again, Senator Barbara Boxer cut her off.

“You just can’t say ‘now, now,’ and forget the past. People died,” Boxer said.

“We have to find out what happened.”

AFP Photo / Brendan Smialowski

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GM Still Has Millions Of Recalled Cars To Repair, Investigators Say

GM Still Has Millions Of Recalled Cars To Repair, Investigators Say

By Todd Spangler, Detroit Free Press

WASHINGTON — Two months after repair kits for 2.6 million recalled General Motors Co. vehicles began being shipped to dealers, the automaker has repaired only about 155,000 vehicles, though the company continues to maintain it will replace all of them on schedule.

Congressional investigators, releasing a memo Monday morning in advance of a Wednesday hearing on the automaker’s ignition-switch recall, noted that just under 400,000 repair kits have been shipped globally by supplier Delphi as of last Wednesday.

GM initially ordered the recall in February and later expanded it to include all model years of Chevrolet Cobalts and HHRs, Saturn Ions and Skys, and Pontiac G5s and Solstices. A defective ignition switch can be jostled out of position, potentially disabling air bags in the event of a crash.

Thirteen deaths and 42 crashes have been linked to the defect.

GM CEO Mary Barra will once again face questions on the recall from a House subcommittee at Wednesday’s hearing. Federal regulators at the National Highway Traffic Safety Administration have fined GM $35 million for not turning over information years ago that could have led to an earlier recall. An internal GM report released two weeks ago by former U.S. Attorney Anton Valukas — who will also testify Wednesday — found the company missed multiple warning signs in part because of a corporate culture that discouraged the sharing of negative news and a failure to move pertinent information between departments.

In Monday’s memo, House investigators noted that GM “states that it is working ‘around the clock'” to manufacture the replacement ignition switches in the hope of concluding the repairs by Oct. 4. But it noted that only 154,731 vehicles have been repaired so far worldwide, 129,583 of which are in the U.S. While the memo made no comment on the speed of the repairs, at the current rate, fewer than 500,000 vehicles would be fixed by October.

GM spokesman Greg Martin said another line is being added to produce the parts and the company still expects to be done with repairs by October. Many of the models and their parts have been out of production for some time, which in part explains why it has taken some time to get the recalled switches produced in large quantities.

In the past 2 months, congressional investigators have received more than 1 million pages of documents from GM and 15,000 from NHTSA, who has come under scrutiny for not ordering a recall sooner. At the subcommittee’s first hearing in April, Barra declined to answer many questions, saying she would wait until Valukas finished his report.

The subcommittee memo said members are expected to ask whether the Valukas report marks the end of GM’s internal investigation of why the defect wasn’t caught sooner; and what needs to be done to change the corporate culture at GM.

After the Valukas report was released, Barra fired 15 GM employees and took disciplinary action against five others.

AFP Photo/Mark Ralston

GM Takes Responsibility For Ignition Scandal

GM Takes Responsibility For Ignition Scandal

Washington (AFP) – General Motors chief executive Mary Barra said Thursday that the company would take full responsibility for the faulty ignition scandal and compensate victims of accidents tied to the defects.

Barra said the saga of the Chevrolet Cobalt ignitions, which led to at least 13 deaths, was “riddled with failure” but that there was no management conspiracy to cover up 11 years of inaction.

Photo: Jim Watson via AFP

Senators Attack Culture Of GM

Senators Attack Culture Of GM

By Jim Puzzanghera and Jerry Hirsch, Los Angeles Times

WASHINGTON — For just a few million dollars, General Motors Co. could have replaced a defective ignition switch that ultimately has been linked to 13 deaths and is expected to cost the automaker billions in repairs, fines and litigation.

GM need only have spent an additional 90 cents on each switch to handle the problem. But the automaker balked at the expense, according to company documents.

That fateful decision came into sharp focus during the second day of hearings on Capitol Hill over the safety scandal. GM now faces multiple investigations by congressional committees, the Department of Justice and the National Highway Traffic Safety Administration into why it didn’t recall 2.6 million cars with the bad switch when it first learned of the problem more than a decade ago.

The switch can unintentionally turn off the vehicle, disabling the power steering and air bags. Spending 90 cents more on each car would have bought a “more robust” design that would prevent “inadvertent ignition offs,” according to the 2005 memo by John Hendler, a GM engineer.

“I think it’s pretty much incontrovertible that GM knew about this safety defect, failed to correct it … and then concealed it from the courts and the United States,” Sen. Richard Blumenthal (D-CT), told GM Chief Executive Mary Barra during a hearing by a Senate Commerce subcommittee Wednesday.

The problem will now cost the automaker as much as $3.5 billion, said Brian Johnson, an analyst with Barclays Capital.

Johnson’s estimate includes a $1 billion trust for plaintiffs involved in accidents that occurred prior to GM’s 2009 bankruptcy and restructuring, along with $500 million in expenses related to accidents after GM emerged from bankruptcy.

Most bankruptcy experts believe that the restructured GM is shielded from liability for crashes in the cars prior to the bankruptcy. But Johnson believes the automaker will set aside money for those victims anyway.

The automaker already has set aside $750 million to pay for recall repairs, and much of that money will be spent on fixing cars with the faulty switches.

The company also has hired Kenneth Feinberg, who helped determine compensation for victims of the Sept. 11 terrorist attacks, the Boston Marathon bombing and other high-profile cases. Feinberg will advise the company on options for handling compensation demands by families of victims of crashes in recall vehicles that took place before GM’s 2009 bankruptcy restructuring.

“Why not just come clean and say … ‘We’re going to do the right thing, we’re going to compensate the victims?’” Blumenthal asked Barra.

She said that the company retained Feinberg because it believes it has “civic as well as legal responsibilities.” But she would not commit to compensation until Feinberg finishes his work.

During the two days of hearings, Barra called the decision to go with the cheaper switches a “mistake.”

But David Sullivan, a manager of product analysis for consulting firm AutoPacific Inc., told the Los Angeles Times that the automaker has long focused on such cost-saving measures.

“The culture within GM at the time of the memo was concerned with every fraction of a penny change in price,” said Sullivan, who previously worked for a parts company that supplied GM’s switch group. “It was purely a cost-driven culture, and now that is going to eat their lunch.”

During Wednesday’s hearing, senators aggressively questioned Barra about the years of delays in recalling vehicles with the faulty switches, accusing the company of trying to hide the problem.

The panel’s chairwoman, Sen. Claire McCaskill (D-MO), referred to a “culture of cover-up.”

Sen. Kelly Ayotte (R-NH), said that revelations that GM redesigned the switch in 2006 — but kept the same part number as the faulty switch already in millions of cars — “strikes me as deception.”

Ayotte said, “I think it goes beyond unacceptable. I believe this is criminal.”

In a statement released by GM after the hearing, Barra said the issues raised at the hearing were “tough but fair.” She has called the failure to identify the redesigned switch as a new part “unacceptable.”

“I appreciate the intense interest by the senators to fully understand what happened and why,” she said. “I am going to accomplish exactly that, and we will keep Congress informed.”

But senators criticized Barra for deflecting questions about the problem by saying she needed to wait for the completion of an internal investigation.

McCaskill said GM withheld information about the defect from a private attorney investigating a fatal 2005 accident involving a recalled GM model, the Chevrolet Cobalt. She criticized Barra for not firing the GM employee, Ray DeGiorgio, who signed a 2006 memo about a redesigned ignition switch — even though he swore during a legal deposition that he knew nothing about the change.

“It is hard for me to imagine you would want him anywhere near engineering anything at General Motors,” said McCaskill, a former prosecutor.

Barra said it appeared DeGiorgio had lied in the deposition, but that neither he nor anyone else at GM has been fired for the recall delay.

Photo: Mark Ralston via AFP