Bloomberg News

GM Said to Place DeGiorgio, Altman on Paid Leave for Recall (2)

April 10, 2014

General Motors Co. (GM:US) has placed two engineers, Ray DeGiorgio and Gary Altman, on paid leave for their roles leading to the recall of 2.59 million small cars with defective ignition switches tied to at least 13 deaths, according to two people familiar with the matter.

Chief Executive Officer Mary Barra said in a statement on the company’s website that two engineers had been placed on leave following a briefing from Anton Valukas, the former U.S. attorney overseeing an independent investigation into circumstances leading to the recall. The statement didn’t name the engineers.

“This is an interim step as we seek the truth about what happened,” Barra said. “It was a difficult decision, but I believe it is best for GM.”

Barra has been under increasing pressure to act decisively as facts of the matter emerge. Senator Claire McCaskill, a Missouri Democrat, said in a hearing last week that she couldn’t understand why DeGiorgio hadn’t been fired.

DeGiorgio and Altman emerged at the center of U.S. Congressional hearings last week in which Barra said it appeared that DeGiorgio had lied under oath during a 2013 deposition in a case brought by the family of a crash victim.

“The data that’s been put in front of me indicates that,” Barra said. He remained employed by GM, she said.

Altman had been an engineering manager on the Chevrolet Cobalt, one of the small-car models included in GM’s biggest recall since 2004.

Design Change

DeGiorgio approved a design change in 2006 that improved the spring in the faulty ignition switch and made it more robust, authorizing its production without fully documenting the decision, according to a letter sent to Barra last week by Democrats on the House Energy and Commerce Committee.

The allegations heightened scrutiny of DeGiorgio, who at the time was the lead design engineer on Cobalt ignition switches. In a deposition taken in early 2013 in a wrongful-death suit against GM in Georgia, DeGiorgio testified that he hadn’t been aware that GM had made any change to the part.

“This information raises important new questions about what GM knew, when GM knew about the risks from this faulty ignition switch, and how the company has handled the recalls of affected vehicles,” wrote the representatives, Henry Waxman of California, Diana DeGette of Colorado and Jan Schakowsky of Illinois.

GM shares rose 0.2 percent to $33.68 at 9:31 a.m. New York time.

‘Business Case’

GM opened an engineering inquiry about the Cobalt ignition switch in November 2004, after customers complained the engine “can be keyed off with knee while driving,” according to a document obtained by House investigators. Four months later, the Cobalt program engineering manager rejected a change, citing parts costs and long lead times.

“None of the solutions presents an acceptable business case,” according to a GM memo cited by the House committee that didn’t identify the engineer. Altman, a GM engineer, testified in a lawsuit last year he was program engineering manager for the Cobalt until May 2005.

GM also said today it created a program to recognize employees for ideas that make vehicles safer and for speaking up when they see something that could affect customer safety, according to the website. Barra had previously created a vice president for vehicle safety position as part of her plan to avoid delays to future recalls.

Barra announced the Speak Up for Safety campaign at an employee town hall meeting today, GM said. The aim is to remove real and perceived barriers to candid conversations between employees and their leaders to foster a “safety first” culture.

“GM must embrace a culture where safety and quality come first,” Barra said in the statement. “GM employees should raise safety concerns quickly and forcefully, and be recognized for doing so.”

To contact the reporter on this story: Tim Higgins in Washington at thiggins21@bloomberg.net

To contact the editors responsible for this story: Jamie Butters at jbutters@bloomberg.net Niamh Ring


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