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GM Accused of ‘Criminal Deception’ on Fatal Switch Defect

April 02, 2014

GM Accused of ‘Criminal Deception’ as Barra Questioned on Recall

The General Motors Co. headquarters in Detroit. Photographer: Jeff Kowalsky/Bloomberg

General Motors Co. (GM:US) Chief Executive Officer Mary Barra fielded pointed questions and accusations from U.S. senators, with one saying GM had a “culture of coverup” and another predicting it may face criminal liability.

Barra said it was “completely unacceptable” that the design of a defective small-car ignition switch now linked to at least 13 deaths was changed without a corresponding change in part number, which would mask a fix. She repeated her assertion to a U.S. House committee yesterday that GM focused on costs in the past and now makes the customer “our compass.”

The chief executive, after the hearing, called the questioning “tough but fair” and said GM will keep sharing information with Congress. “Meanwhile, we will continue doing all we can to repair our customers’ vehicles and rebuild their trust in GM,” she said.

Related:

  • Barra Seeks to Distance GM From Old Cost-First Culture
  • GM U.S. Ignition Recall-Suit Combination Sought by Lawyer

Barra testified today to a panel headed by Senator Claire McCaskill, a Missouri Democrat, that’s seeking to understand why GM and U.S. regulators failed for more than a decade to fix the faulty switches that could slip out of the “on” position when jarred. That in turn could cause the engine to shut off and deactivate the air bags.

Questions from senators today were more pointed than many Barra got yesterday from the Republican-controlled House, with some interrupting or challenging her answers.

‘Criminal Deception’

Senator Kelly Ayotte, a New Hampshire Republican, said GM’s move to change the design without changing the part number was more than bad engineering practice.

“This to me is not a matter of acceptability, it’s criminal deception,” Ayotte said. “Someone made the decision, and it was approved by GM. We should get to the bottom of that.”

Senator Richard Blumental, a Connecticut Democrat who is a former U.S. attorney, said the company could face criminal liability.

Asked if the engineer who approved that change lied under oath during a 2013 deposition in a lawsuit filed by the family of a crash victim, Barra said, “The data that’s been put in front of me indicates that.” The engineer, Ray DeGiorgio, remains employed by GM, she said.

“It’s hard for me to imagine you would want him anywhere near any engineering anything at General Motors under these circumstances,” McCaskill said.

Asked if she’d allow her children to drive a Chevrolet Cobalt with the defective switch, Barra said she would “if he only had the ignition key” -- the advice GM has given owners of the 2.6 million affected cars until they can be repaired.

Sketchy Trail

Transportation Department Inspector General Calvin Scovel, who is investigating why regulators twice elected not to start a probe of the defective switches, said he couldn’t confirm or deny whether GM is under criminal investigation.

Scovel’s staff was involved in a Justice Department investigation that led last month to a $1.2 billion penalty, the largest ever against an automaker, against Toyota Motor Corp. to resolve criminal wire-fraud charges for hiding unintended-acceleration defects.

The U.S. National Highway Traffic Safety Admininstration’s acting administrator, David Friedman, said the agency lacks complete records to show why it overruled an initial recommendation in 2007 to start a probe.

“Frankly, it is something that is currently hamstringing our ability to fully pull together all of what happened,” he said.

Air Bags

NHTSA would have acted sooner if it had information now known about GM’s redesign of the ignition switch, Friedman said. When an agency panel reviewed information about the Cobalt and Saturn Ion in 2007, the cars did not stand out compared with their peers, he said.

“Despite the department’s best efforts to improve its safety-defect analyses and investigations, vehicle safety will remain a concern if automakers conceal vital information,” said Scovel, whose staff highlighted shortcomings at NHTSA after the Toyota recalls. “We expect the industry to be vigilant and forthcoming to keep the public safe.”

NHTSA experts still don’t understand how the Cobalt air bags could have been deactivated with the cars moving, Friedman said. They had thought most safety devices will work even with a loss of power for 60 seconds or more, he told reporters after the hearing.

“We have no evidence of a broader problem,” he said. “Out of due caution, we’re contacting all the automakers as well as reaching out to suppliers to make sure we understand all the implications.”

‘Rough Day’

After her testimony yesterday that was long on apologies and short on detailed answers, Barra, 52, returned for a second day of questioning. Less than three months on the job, she’s trying to separate herself from an old GM that weighed the costs of safety, presenting herself as the face of a new GM that puts customers first.

“If this is the new GM leadership, it’s pretty lacking,” Senator Barbara Boxer, a California Democrat, told Barra. “I am very disappointed, really as a woman to woman, because the culture you’re representing here today is the culture of the status quo.”

McCaskill accused GM of having “a culture of coverup” that allowed it to conceal the problem.

“It might have been the old GM that started sweeping this defect under the rug 10 years ago but even under the new GM, the company waited nine months to take action after being confronted with specific evidence,” McCaskill said.

At the end of Barra’s testimony, McCaskill said she “got aggressive” because auto safety is so important.

“To the extent this has been a rough day for you, it is coming from the right place,” McCaskill said. “You’ve got an enormous responsibility to get this right.”

Barra took a commercial flight to Washington and planned to leave the same way, said Alan Adler, a company spokesman. In 2008, then-CEO Rick Wagoner was criticized for taking a private jet to the U.S. capital to request a taxpayer bailout of GM.

To contact the reporters on this story: Tim Higgins in Washington at thiggins21@bloomberg.net; Jeff Green in Southfield, Michigan, at jgreen16@bloomberg.net; Jeff Plungis in Washington at jplungis@bloomberg.net

To contact the editors responsible for this story: Bernard Kohn at bkohn2@bloomberg.net; Jamie Butters at jbutters@bloomberg.net Jamie Butters


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