House members on Wednesday grilled General Motors CEO Mary Barra and Anton Valukas, the former U.S. attorney she hired to author the company’s internal report absolving top executives of responsibility for delaying a fatal ignition switch defect in some cars.
This was the first House hearing on the issue in which lawmakers were armed with the 325-page report outlining what went wrong.
Valukas said his report blames “individual and organizational failures” and “a lack of accountability, a lack of urgency and a failure of the company personally charged with safety issues.”
His team found no evidence of a cover-up, Valukas said. Instead, the company erroneously viewed years’ worth of stalling car reports as a consumer convenience issue and nothing more.
GM has since acknowledged the defect was responsible for 13 deaths and 53 accidents.
Rep. Diana DeGette (D-Colo.) said during the hearing that her sources are saying there could be “up to 100 deaths” related to the delay in recalling 2.6 million Chevrolet Cobalts, Saturn Ions and other older GM cars. Rep. Phil Gingrey (R-Ga.) said the company’s handling of the problem “smacks of a cover up.”
The hearings came on the same day the law firm Hagens Berman Sobol Shapiro filed a lawsuit in Riverside, California, claiming the recalls have damaged GM used-car resale value for millions of GM car and truck owners. The firm claims these vehicles have lost between $500 and $2,600 in resale value. GM has said it won't pay damages for any lost resale value claims.
The following are excerpts from Wednesday’s hearing:
UPDATE 12:51 p.m. EDT: Rep. Tim Murphy (R-Penn.) points out that GM’s ignition-switch recall website currently tells customers their recall vehicles are safe “if you use only the ignition key with no additional items on the key ring” but doesn’t inform customers what would happen if they don’t do this. “I don’t think [the vehicles] are safe to drive,” he said. “Many time people don’t … look at things like this [the website]. I would recommend that what you do in this situation is make it very clear” what would happen if they don’t follow these instructions.
UPDATE 12:44 p.m. EDT: Rep. Michael Burgess (R-Tex.) pointed out that GM customers can call 1 (800) 222-1020 regarding GM vehicle safety issues.
UPDATE 12:37 p.m. EDT: Valukas explained why the torque of the ignition switch was set so low. “They wanted to make it feel like [the ignition switch of] a European sports car.”
UPDATE 12:23 p.m. EDT: Rep. Paul Tonko (D-N.Y.) called for an increase in penalties against automakers for dragging their feet on safety-related issued. The U.S. National Highway Traffic Safety Administration fined GM earlier this year the maximum $35 million for taking too long to respond to the ignition switch recall, less than 1 percent of the company’s $3.8 billion in profit last year.
UPDATE 12:09 p.m. EDT: Rep. Morgan Griffith (R-Va.) asked Barra why GM continues to seek the so-called bankruptcy shield that protects the GM from injury lawsuits for accidents that occurred before GM emerged from reorganization in 2009. Barra replied that “we want to get to everybody that’s affected” and that anyone that wants to sue the company rather than seek compensation through GM compensation fund “have the same rights they have today.” This means those injured prior to GM’s reorganization have less legal protections to sue for compensation than those who were injured after the “old” GM (General Motors Corp.) became the “new” GM (General Motors Co.) in 2009.
UPDATE 12:02 p.m. EDT: Rep. Cathy Castor (D-Fla.) said former GM engineers have expressed problems related to the location of the key -- that it's not just the weak torque of the faulty ignition switch but also that the key's location makes it easy for some drivers to bump the key out of the "on" position with their knees. Barra said these former engineers, including Ray DeGiorgio, one of the 15 GM employees fired because of the ignition switch debacle, are not credible. She says the fix has been approvied by NHTSA and that it solves the problem.
UPDATE 11:50 a.m. EDT: Rep. Pete Olson (R-Tex.) asked Barra how many people GM thinks have been injured by the ignition-switch defect. The CEO had no answer.
UPDATE 11:49 a.m. EDT: Rep. Diana DeGette (D-Colo.) said that only 177,000 vehicles out of 2.6 million believed to have the potentially fatal ignition switch defect have been repaired. Barra responded by saying she is confident GM can meet the Oct. 4 deadline imposed by the U.S. National Highway Traffic Safety Administration to have these vehicles fixed or scheduled for repair.
UPDATE 11:44 a.m. EDT: Rep. Tim Murphy (R-Penn.) asked Valukas to define what a “cover up means” to him. Valukas responded that his investigation looked for evidence of GM employees concealing evidence of safety issued from other GM employees. “We found no evidence of that,” he said.
UPDATE 11:38 a.m. EDT: Rep. Phil Gingrey (R-Ga.) asks Barra how GM engineers could produce a car where the airbags are disabled when a vehicle stalls in motion. Barra said she wouldn’t speculate, but that this engineering issue is now part of GM’s safety protocol. Gingrey says the way GM handled the ignition switch problem “smacks of a cover up.”
UPDATE 11:35 a.m. EDT: Rep. Gene Green (R-Tex.) asked Barra how much GM’s compensation fund will cost. Barra declined to provide an estimate.
UPDATE 11:24 a.m. EDT: Rep. Kenneth Butterfield (D-N.C.) asked Barra if GM is investigating ignition systems for all comapny vehicles. Barra said she expects a full review of these systems to be done by the end of the month. The company issued two ignition-related recalls in the past week.
UPDATE 11:09 a.m. EDT: Rep. Bruce Braley (D-Ia.) asked whether GM will compensate people who weren’t killed, who weren’t seriously injured or whose vehicle values have been brought down due to the ignition switch problem. Barra responded that currently the GM compensation program only applies to families of people who were killed and people who were seriously injured.
UPDATE 11:05 a.m. EDT: Rep. Marsh Blackburn (R-Tenn.) asked how GM engineers could approve a part that was not safe. Barra responded that in the case of the faulty ignition switch there was inadequate internal documentation and “the individual who did not provide adequate documentation is no longer with the company.”
UPDATE 10:48 a.m. EDT: Rep. Diana DeGette (D-Colo.) asks Barra who will be eligible for liability claims, including the possibility of “up to 100 deaths” related to the faulty ignition. She asks Barra if accident victims be required to waive their legal claims against GM. Barra replied that the GM compensation program is “in lieu of” lawsuits. GM has named Kenneth Feinberg, a renowned lawyer who handled payouts to 9-11 victims, to manage compensation to accident victims and their families.
UPDATE 10:43 a.m. EDT: Rep. Diana DeGette (D-Colo.) asked Barra about GM company culture “that encourages people not to stick their necks out and report things.” She cites an unmanned source at GM who says the current climate is actually making employees more hesitant to come forward with pointing out problems. Barra responded by citing the company’s new “Speak Up For Safety” program to encourage all GM employees to step forward with their vehicle-safety concerns moving forward.
UPDATE 10:40 a.m. EDT: Rep. Tim Murphy (R-Penn.) asks if anything GM has done could be construed as a cover-up. Valukas replied that they didn’t find any evidence that anyone “deliberately withheld” information about safety issues.
UPDATE 10:37 a.m. EDT: Anton Valukas said his investigative team interviewed 230 GM employees and 41 million internal documents. He blames “individual and organizational failures” and “a lack of accountability, a lack of urgency and a failure of the company personally charged with safety issues.”
UPDATE 10:30 a.m. EDT: GM CEO Mary Barra outlined actions since the release of the Valukas report two weeks ago, including restructuring the company’s vehicle safety policies. She says the company is reviewing all GM vehicles in order to create a “new standard and new norm” for the industry. “We are taking a very aggressive approach to recalls.” GM has issued 44 safety recalls affecting more than 20 million vehicles worldwide.
UPDATE 10:25a.m. EDT: Rep. Jan. Schakowsky (D-Ill.) calls to make Technical Service Bulletins to be readily available to the public.
UPDATE 10:23 a.m. EDT: Schakowsky brings up today’s Businessweek story that appears to show a culture of retribution against company employees that bring up safety concerns. Says the no senior level manager has been held accountable. Rep. Michael Burgess (R-Tex.) brings up General Motors liability protections under its 2009 bankruptcy and questions whether GM will consider the interests of crash victims who might be exempt from liability claims due to GM’s Chapter 11 reorganization.
UPDATE 10:18 a.m. EDT: Rep. Fred Upton (R-Mich.), chair of the House Energy and Commerce Committee, said his committee will continue its investigation in the company’s “culture that allowed safety problems to fester for years.”
UPDATE 10:14 a.m. EDT: Rep. Diana DeGette (D-Colo.) says the Valukas report does not fully explain how the faulty ignition switch was approved, or how it was redesigned in 2006. “It doesn’t identify one official in high leadership [at GM].” DeGette says the report does not adequately absolve high-level executives. “They [high-level executives] set the tone and shape the attitudes of the employees.” The lawmakers blamed the problem on GM’s “culture of secrecy.”
UPDATE 10:07 a.m. EDT: GM should have changed the culture or changed its people. It was in no hurry to change problems with their vehicles despite complaints from consumers and GM engineers, says Rep. Tim Murphy (R-Penn.), head of the House Subcommittee for Oversight and Investigations.
Original story begins here.
General Motors CEO Mary Barra returned to Capitol Hill Wednesday morning to face a grilling from House lawmakers regarding the automaker’s vehicle-safety crisis just days after it expanded a recall related to ignition-switch problems.
Joining Barra is Anton Valukas, the former U.S. attorney hired by GM who delivered a report earlier this month relieving top executives of any responsibility for why it took over a decade to address a fatal ignition switch flaw linked to at least 13 deaths and 53 accidents.
On April 2, Barra testified before the Senate Subcommittee on Consumer Protection, when committee chair Claire McCaskill (D-Mo.) accused GM of having a “culture of cover-up.”
Now, House members are armed with the results of the 325-page Valukas report (pdf) issued June 6 that Barra described as “brutally tough and deeply troubling.” So far the internal investigation has led to the firing of 15 employees, mostly mid-level executives, for failing to inform superiors of problems in cars. The appearance before the House Subcommittee for Oversight and Investigations chaired by Tim Murphy, a Republican from Pennsylvania, comes on the same day Businessweek published a scathing cover story centered on Courtland Kelley, a third-generation, 30-year GM employee.
The story underscores a culture at GM where company underlings feared to speak up about safety concerns. In 2003, Kelley sued GM under a local whistleblower law, but the case was tossed out on technicalities. Kelley’s career was derailed after that, he said, when he was transferred out of his position as head of a nationwide GM vehicle inspection program.
The story draws on details provided in the Valukas report and builds a case that GM’s corporate culture shielded top executives from being aware of potentially fatal vehicle flaws, which could help plaintiffs build a case against GM challenging its liability protections granted when the company emerged from bankruptcy in 2009.
On Monday, GM announced it was recalling 3.6 million more of its cars in North America linked to problem with the ignition switch.