General Motors Co. (GM:US) Chief Executive Officer Mary Barra is scheduled to testify at a U.S. congressional hearing April 1 amid a probe into why it took more than a decade to recall vehicles equipped with an ignition defect that’s been linked to a dozen deaths.
National Highway Traffic Safety Administration Acting Administrator David Friedman will also testify to the Oversight and Investigations Subcommittee of the House Energy and Commerce Committee, Fred Upton, the committee’s chairman and a Michigan Republican, said in a statement yesterday.
“Their testimony is critical to understanding what the company and NHTSA knew about the safety problems, when they knew it, and what was done about it,” Upton said. “We want to know if this tragedy could have been prevented and what can be done to ensure the loss of life due to safety failures like this don’t happen again.”
GM was aware as long ago as 2001 that the switches could slip out of position, cutting off power. Barra said March 18 she first learned about an analysis of the stalling cars in December, weeks before she become CEO, and that she was informed of the decision to recall cars on Jan. 31.
Barra, who became Detroit-based GM’s first female CEO this year, has apologized for the lives lost and has said there would be “no sacred cows” in the company’s investigation into a failure tied to at least 31 accidents and 12 deaths.
“Mary welcomes the opportunity to participate in the hearing as part of GM’s effort to cooperate with Congress and other authorities,” Greg Martin, a GM spokesman, said in an e-mail.
GM fell 0.9 percent to $34.93 at the close in New York.
The company announced it was replacing the switches last month, years after customers started complaining their cars could go dead if they were bumped or if their keys were on heavy key chains.
In addition to hearings in the U.S. House and Senate, GM must answer to the Federal Bureau of Investigation, the Transportation Department and lawyers the company hired to investigate itself. The U.S. Justice Department opened a criminal investigation on March 11, according to people familiar with the matter.
The company is also facing lawsuits in Texas, Michigan and California, which may be consolidated.
The California lawsuit against GM filed on March 19, came on the same day as the U.S. announced a settlement with Toyota Motor Corp. (7203) for $1.2 billion to end a criminal probe into sudden unintended acceleration that led to the recall of more than 10 million vehicles. The settlement represents the largest criminal penalty imposed on an automaker in the U.S., Attorney General Eric Holder said.
The recalls blemished Toyota’s reputation for quality that spurred its rise to become the world’s top-selling automaker, a title the company relinquished for one year to GM. A settlement puts Toyota a step closer to resolving the legal fallout of those recalls.
Barra didn’t say on March 18, when she apologized for the lives lost in accidents linked to the ignition defect, whether GM would compensate the families of those who died or any of the people injured.
The automaker hasn’t informed relatives of anyone it has identified as having died in a defect-related crash and hasn’t communicated with them, she said, though it may do so after concluding its investigation, which could take months.
By court order, the new GM can’t be held responsible for any product-related liabilities, such as wrongful death, personal injury or property damage, except those arising on or after July 10, 2009, when the new entity was born. Challenging GM’s immunity would require asking U.S. Bankruptcy Judge Robert Gerber, the judge who oversaw the historic U.S.-backed bankruptcy to reconsider his ban on claims.
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