The investigator who probed the GM ignition switch recall has found a pattern of management deficiency and misjudgment that led to safety problems being ignored for years, but says there was no conspiracy by the corporation to cover up the facts.
GM CEO Mary Barra released the findings of the probe at a global town hall with employees in Detroit on Thursday, and pledged to fix the corporate culture that led to the debacle and a massive recall program.
“With all of our colleagues around the world watching today, I want it known that this recall issue isn't merely an engineering or manufacturing or legal problem. It represents a fundamental failure to meet the basic needs of these customers,” Barra said in the meeting, which was open to the media.
Former U.S. attorney Anton Valukas presented his findings to the GM board Monday, in what Barra called a “brutally tough and deeply troubling” report.
GM had hired Valukas to investigate why it took the company more than 10 years to recall more than 2.6 million small cars with faulty ignition switches. The company says the problem has caused at least 13 deaths, but lawyers suing GM say the number is closer to 60.
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Two Canadian law firms have launched class-action lawsuits over GM's handling of the recall, which has affected 367,000 cars in Canada alone.
Valukas had unlimited access to GM files and personnel, and did 350 interviews as well as reviewed more than 41 million internal documents.
Among his findings:
- GM personnel's inability to address the ignition switch problem, which persisted for more than 11 years, represents a history of failures.
- While everybody who was engaged on the ignition switch issue had the responsibility to fix it, nobody took responsibility.
- Throughout the entire 11-year history, there was no demonstrated sense of urgency, right to the very end.
- The ignition switch issue was touched by numerous parties at GM – engineers, investigators, lawyers – but nobody raised the problem to the highest levels of the company
Valukas said what he found was a "pattern of incompetence and neglect" and failure to take responsibility but said senior management did not appear to know about the problems.
Barra, who was a product development chief before she became CEO, said she did not know of the problems until last December.
Barra said she intends to follow Valukas’s recommendations in righting the corporate culture at GM, and has begun by firing 15 people and disciplining five others for their role in the recall.
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“Some were removed because of what we consider misconduct or incompetence. Others have been relieved because they simply didn't do enough: They didn’t take responsibility; didn’t act with any sense of urgency,” she said.
Barra also pledged compensation for the victims of the faulty ignition switch, which would turn off at highway speeds, making it difficult to control the vehicle.
She said GM has asked Ken Feinberg to review options and administer the compensation program.
Feinberg has sole discretion to determine who should be compensated and how much GM should pay.
'No words' to ease grief and pain, CEO says
Barra began her town hall with an apology to the families of the people who died driving a Cobalt or other small GM vehicle.
"I realize there are no words of mine that can ease their grief and pain. But as I lead GM through this crisis, I want everyone to know that I am guided by two clear principles: First, that we do the right thing for those who were harmed, and second, that we accept responsibility for our mistakes and commit to doing everything within our power to prevent this problem from ever happening again," she said.
She also pledged to get all the recalled cars repaired by October, adding that GM has already fixed 113,000 cars.
Barra said GM is on a “journey” to fix its internal culture.
The most important change, Barra said, is restructuring the safety decision-making process to raise it to the highest levels of the company.
Fixing GM culture
She also pointed to the hiring of Jeff Boyer as vice-president of safety for the company and said she meets with him regularly.
GM has instituted a Speak Up for Safety program encouraging employees to report potential safety issues quickly and added 35 safety investigators to work throughout the company.
“There’s a commitment to have a high safety culture, to have high quality culture. A culture doesn’t change overnight, but there is a commitment to work toward it,” Barra said.
The report doesn't complete GM's recall saga. The automaker still faces a criminal investigation by the U.S. Department of Justice — led by the same team that recently reached a $1.2 billion settlement with Toyota over its 2010 sudden acceleration recall. It also faces multiple lawsuits from victims and from owners whose say their cars have lost value.
Barra, who testified before House and Senate committees in April, will also likely be called back to Washington.
Senator Claire McCaskill, chairman of the Senate Commerce, Science and Technology Committee's consumer protection subcommittee, said she intends to hold a hearing on the delayed recalls later this summer.
"I won't be letting GM leadership, or federal regulators, escape accountability for these tragedies," she said in a statement. "The families of those affected deserve no less."
Some were critical of the report and its conclusions for sparing Barra and other top executives.
"It seems like the best report money can buy," said Senator Richard Blumenthal. "It absolves upper management, denies deliberate wrongdoing, and dismisses corporate culpability."
Last month, GM paid a $35 million fine — the largest ever assessed by the National Highway Traffic Safety Administration – for failing to report the problem quickly to federal regulators. GM knew about problems with the ignition switches as early as 2001, but it wasn’t until earlier this year that it moved to recall the vehicles.