Bloomberg News

GM CEO Barra Making Return Appearance in Congress June 18

June 11, 2014

General Motors Co. (GM:US) Chief Executive Officer Mary Barra will return to Congress next week to address lawmakers’ unanswered questions about why the company waited so long to recall 2.59 million cars for a faulty ignition switch.

Anton Valukas, the former federal prosecutor who led an internal GM probe of the the events leading to the recall, will join Barra at the June 18 hearing, the House Energy and Commerce Committee said today. Barra had testified before the committee on April 1 and at a Senate hearing April 2.

A 325-page report by Valukas released last week showed that multiple GM employees had chances spanning more than a decade to fix the part its designer eventually labeled the “switch from hell.” The report blamed a lack of urgency among GM engineers and lawyers to find the root cause of crashes in which at least 13 people were killed.

“Earlier this year, Ms. Barra testified that she would not be able to answer certain questions until the company’s internal investigation was complete,” U.S. Representatives Fred Upton of Michigan and Tim Murphy of Pennsylvania. both Republicans, said in a statement. “Next week we will have the chance to get those answers and compare the company’s findings to our own.”

GM, the largest U.S. automaker, has said heavy key rings or jarring can cause switches on some cars to slip out of the “on” position, which may disable the cars’ air bags. GM began recalling the vehicles in February of this year, even though the issue was first noticed as far back as 2001.

Valukas Report

Barra wants to return to update lawmakers on actions GM is taking because of the recall, according to Greg Martin, a company spokesman.

“These efforts include fixing the failures identified in the Valukas report, building a culture centered on safety, quality and excellence, and doing what’s right for victims and their families,” Martin said in an e-mailed statement.

GM hired Valukas, an attorney with Chicago-based Jenner & Block, to find out why the company took more than a decade to initiate a recall. Valukas found instances where company staff feared alerting supervisors to safety concerns and were trained to avoid taking notes in meetings for fear of being used later in product liability lawsuits.

Inquiries repeatedly focused on stalling rather than air-bag failure, Valukas said. Company committee after committee concluded it was a matter of customer convenience rather than safety, adding years to the process.

Employee Dismissals

Barra dismissed 15 GM employees based on the report’s findings, including Mike Robinson, the Detroit-based automaker’s vice president of sustainability and global regulatory affairs, whose responsibilities included overseeing the company’s relationship with the National Highway Traffic Safety Administration. Senior engineers, lawyers and product investigators were also let go.

At the first round of congressional hearings, lawmakers criticized Barra for not being able to answer specific questions about why GM didn’t act more quickly to recall the affected cars, including the Saturn Ion and Chevrolet Cobalt. Barra repeatedly cited the need for Valukas to complete his investigation.

Barra conceded that GM operated under a “cost culture” during the period in which the ignition-switch failures were being investigated. She assured lawmakers the company’s new emphasis is on its customers.

Those assurances didn’t satisfy some lawmakers, like Democratic Senators Claire McCaskill of Missouri and Richard Blumenthal of Connecticut, former prosecutors who suggested there was evidence of criminal violations.

NHTSA Briefings

GM last month agreed to a record $35 million fine for delays in reporting the potential safety defect to NHTSA. The law requires notification within five days of discovering a fault that could have safety implications, even if the manufacturer hasn’t concluded there’s a defect.

Transportation Department officials, including Secretary Anthony Foxx, criticized GM for failing to meet its obligations to keep the public safe. NHTSA’s acting administrator, David Friedman, said the company’s decision-making, structure and processes blocked attempts to find out why air bags were misfiring in millions of vehicles.

GM agreed to reform its management structure with input from its regulators. It will meet NHTSA representatives monthly to review every vehicle safety issue under review for at least a year. The company will brief NHTSA quarterly about all the steps taken to implement the agreement it signed with the regulator.

To contact the reporter on this story: Jeff Plungis in Washington at jplungis@bloomberg.net

To contact the editors responsible for this story: Romaine Bostick at rbostick@bloomberg.net Elizabeth Wasserman


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