Tuesday, June 24, 2014

GM to begin processing faulty ignition switch claims by 1 August

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General Motors expects to begin processing claims related to its deadly faulty ignition switches by 1 August, chief executive officer Mary Barra will tell the US Congress on Wednesday.

The GM boss’s prepared testimony was released a day before her second appearance before the House energy and commerce committee. In her previous appearance, Barra faced a barrage of criticism over GM’s handling of the defect, linked to at least 13 deaths.

GM released an internal report into the scandal earlier this month compiled by former US attorney Anton Valukas. The company fired 15 employees and instituted a series of new safety checks as the report was released. In her testimony, Barra describes the report as “brutally tough and deeply troubling.”

“It paints a picture of an organization that failed to handle a complex safety issue in a responsible way. I was deeply saddened and disturbed as I read the report. For those of us who have dedicated our lives to this company, it is enormously painful to have our shortcomings laid out so vividly. There is no way to minimize the seriousness of what Mr Valukas and his investigators uncovered,” she said.

GM appointed attorney Ken Feinberg to work on a plan to compensate victims of the ignition defect, which led to car engines turning off unexpectedly and disabling airbags. Barra said Feinberg, known for his handling of compensation for victims in high profile cases including the 9/11 terrorist attacks and BP Deepwater Horizon oil spill, will outline his plan to GM by the end of the month and the company intends to start compensating victims by 1 August.

GM has recalled more than 20m cars this year, including 2.6m Chevrolet Cobalts and other small cars with ignition problems. On Monday it issued a recall for another 3.36m cars including Chevrolet Impala, Cadillac Deville and Buick Lacrosse for an ignition issue that can lead to power steering and power braking being turned off while the car is being driven.

Valukas will also testify before the committee.

In his prepared remarks he said: “The story of the Cobalt is one of a series of individual and organizational failures that led to devastating consequences. Throughout the decade that it took GM to recall the Cobalt, there was a lack of accountability, a lack of urgency, and a failure of company personnel charged with ensuring the safety of the company's vehicles to understand how GM's own cars were designed.

"We found failures throughout the company â€" including individual errors, poor management, byzantine committee structures, lack of training, and inadequate policies.”

It remains to be seen whether Feinberg’s plan or Valukas’s report will satisfy Congress, or the lawyers who claim GM’s failures were responsible for many more accidents and fatalities.

Commenting on the car company’s latest recall Monday, committee chairman Fred Upton said: “This latest recall raises even more questions about just how pervasive safety problems are at GM. Drivers and their families need to be assured that their cars are safe to drive.”


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