Sunday, June 8, 2014

GM chief Mary Barra: 'pattern of incompetence' caused fatal recall delay

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General Motors’ fatal delay in recalling cars with faulty ignition switches was caused by a “pattern of incompetence and neglect”, chief executive Mary Barra said Thursday.

Announcing the findings of an internal report, Barra said she had fired 15 people and disciplined another five for the decade-long delay that has been linked to at least 13 fatal crashes and eventually led to the recall of 2.6m Chevrolet Cobalts, Saturn Ions and other models equipped with faulty ignition switches.

The car giant’s actions come after Barra received a report from former US attorney Anton Valukas into the ignition scandal. The recall has also triggered a federal investigation, congressional hearings and a flurry of lawsuits from family members of people killed in cars with faulty switches. Those lawyers claim the death count is far higher than GM’s estimated 13.

Valukas’s report has now been given to federal regulators and Congress. In April, Barra, a lifelong GM employee, was grilled about her knowledge of the fault by a House committee. She denied having any prior involvement.

Valukas’s report, which covered more than 350 interviews with over 230 individuals and more than 41m documents, cleared Barra and other senior executives of any direct involvement in the recall delay. It found no evidence of a conspiracy by the corporation to cover up the facts. Nor did the report conclude that employees had made a trade-off between safety and cost.

During April’s often heated congressional hearing, Barra was repeatedly quizzed about the delay in upgrading the ignition switches â€" which cost 57¢ a car. Democrat Diana DeGette said that GM elected not to replace the part because of the lack of "an acceptable business case" for doing so.

In a statement, Barra said she wanted to “take this opportunity to again express my deepest sympathies to the families that lost loved ones and to those who were injured”.

Barra said the report had uncovered “a pattern of incompetence and neglect”.

“Repeatedly, individuals failed to disclose critical pieces of information that could have fundamentally changed the lives of those impacted by a faulty ignition switch. If this information had been disclosed, I believe in my heart the company would have dealt with this matter appropriately,” she said.

“Furthermore, numerous individuals did not accept any responsibility to drive our organization to understand what was truly happening. The report highlights a company that operated in silos, with a number of individuals seemingly looking for reasons not to act, instead of finding ways to protect our customers,” she added.

Barra outlined five of the reports key findings:

GM personnel's inability to address the ignition switch problem, which persisted for more than 11 years, represents a history of failures.

While everybody who was engaged on the ignition switch issue had the responsibility to fix it, nobody took responsibility.

Throughout the entire 11-year history, there was no demonstrated sense of urgency, even until the end.

The ignition switch issue was touched by numerous parties at â€" engineers, investigators, lawyers â€" but nobody raised the problem to the highest levels of the company.

Overall, the report concludes that from start to finish the Cobalt saga was riddled with failures, which led to tragic results for many.

“I hate sharing this with you as much as you hate hearing it. But I want you to hear it. In fact, I never want you to forget it. This is not just another business crisis for GM. We aren't simply going to fix this and move on. We are going to fix the failures in our system â€" that I promise. In fact, many are already fixed. And we are going to do the right thing for the affected parties,” she said.

Barra is expected to appear before Congress for the second time soon. House energy and commerce committee chairman Fred Upton said Thursday he had spoken to Barra after the report’s release and she “assured me that she would come back to testify about the report and answer outstanding questions."

Carl Tobias of the University of Richmond’s school of law said members were unlikely to be persuaded by this report after the last heated sessions. “The report appears very comprehensive but it doesn’t tell us a lot that we didn’t already know,” he said.

Barra has announced that attorney Kenneth Feinberg, known for handling high-profile victim compensation cases, will handle a compensation fund for victims of the ignition switches. “We still don’t know who will be compensated or what those people will need to show,” he said.

GM emerged from bankruptcy in 2008 and is technically a different company from the one that installed the faulty switches. Tobias said there were still major questions about the extent that bankruptcy laws will protect GM from lawsuits.

“This story is far from over,” he said.

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