GM Ignition Switch Recall investigation: CEO Mary Barra Says 'No One Took Responsibility'

 @angeloyoung_a.young@ibtimes.com on June 05 2014 9:32 AM
Mary Barra June 5
General Motors Chief Executive Officer Mary Barra is shown on a screen in the press room speaking to employees before holding a press conference on June 5, 2014, in Warren, Michigan. Bill Pugliano/Getty Images

General Motors Co. (NYSE:GM) CEO Mary Barra on Thursday that the company forced out 15 employees, mostly mid-level executives, for failing to inform superiors of problems in cars that  had faulty ignition switches it said have killed 13 people.

Barra’s claim is significant because it’s an important distinction that shields GM from accusations it covered up the ignition switch problem during its 2009 bankruptcy.

GM’s also rolling out a victims’ compensation fund that will run by Ken Feinberg, who administered federal bailout money under the 2008 Troubled Asset Relief Program (TARP). Feinberg’s group will begin to process claims on August 1.

Despite the compensation plan, GM President Dan Ammann stopped short of saying the company would accept liability for injuries that happened before GM emerged from bankruptcy in 2009. This means victims and next of kin will either have to appeal to the company’s victims’ compensation fund or try to argue in court that the findings in a GM-commissioned report by former U.S. Attorney Anton Valukas, which is due out today, are incorrect; that GM did cover up the product defect during its bankruptcy proceedings and is therefore liable for damages.

What follows are details of Thursday morning’s press conference in Warren, Michigan:

UPDATE 10:30 a.m. EDT: Ken Feinberg “is going to set the rules” for who is eligible for compensation for injury linked to the faulty ignition switch, says GM President Dan Ammann. Feinberg, the head of the newly announced GM victims’ compensation fund, will have complete control in identifying who is eligible for compensation. GM’s official death toll linked to the faulty ignition switch stands at 13, but the company doesn’t count people injured or killed in the vehicles if they were in the back seat. Ammann says Feinberg will have the power to determine if compensation will be extended to families of people who aren’t counted in GM official death count. 

UPDATE 10:21 a.m. EDT: GM’s newly announced compensation fund for victims of the faulty ignition switch will begin to accept injury claims on Aug. 1, says GM President Dan Ammann.

UPDATE 10:19 a.m. EDT: General Motors is protected from liability for all injuries incurred prior to its 2009 Chapter 11 reorganization. On Thursday, GM President Dan Ammann declined to say whether the company would waive its liability protection for victims of the faulty ignition switch in Chevy Cobalts and other older model GM cars. “They have the same legal rights as they do today,” said Ammann. This means it would be very difficult to sue GM for death or injury incurred prior to July 9, 2009, the day the “old” GM became a new corporate entity free of pre-bankruptcy liabilities. 

UPDATE: 10:08 a.m. EDT: Read Mary Barra’s prepared remarks here.

UPDATE 10:01 a.m. EDT: When asked why GM is only counting front seat fatalities in its 13-person death toll, GM President Dan Ammann said only that GM is willing to “do the right thing” to victims. Ken Feinberg, who has been named administrator of a victims’ compensation fund, will determine eligibility for compensation. “Based on all of the information we have right now, that [13] is the official [death toll] number,” said Ammann.

UPDATE 9:58 a.m. EDT: Barra declined to say how many of the 15 employees that were let go as a result of the ignition switch controversy were allowed to retire with benefits. General Motors CEO Mary Barra addressed company employees on Thursday ahead of the release of an internal investigation into why it took over a decade to issue a safety recall related to a faulty ignition switch that has been linked to at least 13 deaths and 47 accidents. 

Original story begins here: 

Blaming "experienced engineers" at the company, Barra made one thing clear: GM top brass knew nothing about the problem. 

“No one took responsibility," she said. "No one raised the issues to the highest levels of the company.” 

Barra announced that 15 employees have been let go so far for their involvement, including mid-level executives. She declined to disclose further details except to say that more than half of them were executive-level employees. 

Barra said the company would create a victims’ compensation fund that will be administered by Kenneth Feinberg, the former so-called “pay czar” responsible for overseeing executive compensation at companies, including GM, that received federal bailout money under the 2008 Troubled Asset Relief Program (TARP).

The results of a GM-funded three-month investigation by former U.S. Attorney Anton Valukas are due out today. The report is expected to answer important questions about why it took more than a decade for North America’s largest automaker to rectify a flaw in early Chevrolet Cobalts and other compact sedans. 

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