Bloomberg News

GM Fined by U.S. Safety Regulator for Incomplete Answers

April 09, 2014

General Motors Headquarters

General Motors Co. didn’t respond by an April 3 deadline to more than one-third of requests made by the National Highway Traffic Safety Administration, which is investigating whether the largest U.S. automaker broke laws in delaying the recall, the agency said. Photographer: Jeff Kowalsky/Bloomberg

General Motors Co. (GM:US)’s failure to fully answer questions about why it waited years to recall 2.59 million small cars over a defect tied to 13 deaths is testing the patience of lawmakers and regulators.

GM didn’t respond to more than one-third of requests made by the U.S. National Highway Traffic Safety Administration with an April 3 deadline and is being fined $7,000 a day. An agency lawyer called the internal probe the automaker cited “irrelevant” and threatened to refer GM to the Justice Department. Congressional leaders said they’ll schedule more hearings and expect more disclosure next time from Chief Executive Officer Mary Barra.

“They can’t get their stories straight,” said David E. Johnson, chief executive officer of Strategic Vision LLC, a public relations and branding company based in Atlanta. “They promised to be transparent. It looks like they’re hiding something now.”

GM has accrued $28,000 in fines, NHTSA Chief Counsel O. Kevin Vincent said in a letter yesterday to Lucy Clark Dougherty, general counsel of GM North America.

Related:

  • GM Workers Who Built Defective Cars: 'How Does This Happen?'
  • Toyota Recalls More Than 6 Million Vehicles Worldwide

The Detroit-based automaker has produced 21,000 documents totaling more than 271,000 pages that span a decade, Greg Martin, a spokesman, said in an e-mailed statement. Those records were pulled from more than 5 million documents.

“We believe that NHTSA shares our desire to provide accurate and substantive responses,” Martin said. “We will continue to provide responses and facts as soon as they become available and hope to go about this in a constructive manner.”

GM fell 2.6 percent, to $33.62 at the close in New York.

107 Points

NHTSA told GM in an order dated March 4 to answer questions on 107 points about what it knew, and when, about the ignition-switch failures linked to six Chevrolet, Pontiac and Saturn models sold in the U.S.

The agency asked about steps the company took to investigate engineering concerns and consumer complaints about engine stalling dating from 2004. GM has said heavy key rings or jarring can cause ignition switches on some cars to slip out of the “on” position, cutting off power and deactivating air bags.

GM acknowledged April 4 that it hadn’t fully complied with the order, Vincent said.

Transparency Promised

“If GM is truly committed to the transparency they’ve promised, they need to cooperate fully with safety officials,” Senator Claire McCaskill, a Missouri Democrat, said in an e-mail. “And their failure to turn over the necessary documents is a troubling start to the next phase of this process.”

After the recall was announced in February, GM received some praise for its openness. Barra met with some reporters in Detroit, apologizing and saying that there would be “no sacred cows” in the company’s investigation.

In two days of testimony before Congress last week, she again apologized and vowed to eventually provide answers.

“Sitting here today, I cannot tell you why it took years for a safety defect to be announced in that program, but I can tell you that we will find out,” Barra said in her prepared remarks for the House and Senate hearings. “When we have answers, we will be fully transparent with you, with our regulators, and with our customers.”

While there may be good reasons GM couldn’t comply with NHTSA’s request, including multiple investigations going on at the same time, the public probably won’t understand, said Karl Brauer, a senior analyst with Kelley Blue Book.

“All that most people are going to come away with is that they’re not complying,” Brauer said. “At the very least, that doesn’t reflect well. It doesn’t send a good message.”

Changing Reasons

The company previously indicated it might need more time to resolve “engineering questions” by April 3, then cited the internal investigation led by Jenner & Block LLC Chairman Anton Valukas as the reason for not providing some answers unrelated to technical matters, Vincent said.

Those included questions about whether GM officials approved changes to ignition-switch designs and how extensively a field-performance evaluation committee reviewed complaints, he said.

GM in March announced it hired Valukas, who served as a Justice Department-appointed examiner of the downfall of Lehman Brothers Holdings Inc., to help lead the automaker’s internal probe along with GM General Counsel Michael Millikin.

After her first day of testimony, Barra was asked by reporters if she could’ve shared more, and she said she couldn’t.

“We won’t sacrifice accuracy for speed,” she said.

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

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


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