GM investigation: 'Pattern of incompetence, neglect'

DETROIT—General Motors has dismissed 15 employees, including at least eight executives, after an internal investigation found “a pattern of incompetence and neglect” that led to 11 years of delays in recalling millions of cars for a fatal defect, CEO Mary Barra said on June 5.

Barra promised that the company would address future safety issues far differently, warning employees that failing to report risks would make them “part of the problem” and even inviting them to contact her directly if they couldn't get potential defects addressed themselves.

She said the report by former federal prosecutor Anton Valukas found no evidence of an intentional cover-up or that “any employee made a tradeoff between safety and cost,” concluding employees initially believed it to be a customer-satisfaction issue rather than one that could lead to crashes or deaths.

Barra said GM plans to set up a compensation fund for people affected by crashes related to the ignition switch, though details about the plan have not been finalized.

GM executives said Feinberg would set eligibility rules for the compensation fund, meaning he could decide to count deaths that are not among the 13 that GM has tallied.

President Dan Ammann said victims or the families of those killed could opt out of the fund and choose to pursue a traditional lawsuit, but if they do they will have “the same legal rights that they do today.”

That means GM could assert in court that it is not liable for pre-bankruptcy crashes. Ten of the 12 deaths identified by Automotive News, a sister publication of Rubber & Plastics News, and many of the non-fatal crashes occurred before GM's bankruptcy.

GM Chairman Tim Solso said in a statement that the board of directors will create a stand-alone committee to oversee “risk-management” issues. He also said the report concluded that Barra, Ammann and global product-development chief Mark Reuss did not learn of the ignition switch matter until December, shortly before the decision was made to issue a recall.

During a meeting with GM employees that was broadcast online, Barra called Valukas' report “extremely thorough, brutally tough and deeply troubling.” She said engineers and others who learned of problems with ignition switches as early as 2003 “misdiagnosed the problem from the very beginning” and failed to treat it with the appropriate level of urgency.

Barra did not identify the employees who were fired or resigned. Two engineers who had been suspended with pay since April 10—Ray DeGiorgio, who designed the ignition switch, and Gary Altman, the program engineering manager for the Chevrolet Cobalt—are among them, people familiar with the matter told Automotive News. Neither DeGiorgio nor Altman have commented publicly on their situations.

Barra said most or all of the dismissed employees worked in the engineering, legal, public policy and quality departments and that more than half were senior-level executives. Five additional employees have been disciplined, she said.

“From start to finish, the Cobalt saga was riddled with failure, which led to tragic results for many,” Barra said.

Leaders of the House and Senate committees that have been investigating the recall each said they plan to review the Valukas report and hold follow-up hearings in the coming months.

“I won't be letting GM leadership, or federal regulators, escape accountability for these tragedies,” Sen. Claire McCaskill, D-Mo., said in a statement. “That's why I'll be holding a follow-up hearing later this summer to address unanswered questions. The families of those affected deserve no less.”

Barra said GM dealers have gotten 280,000 repair kits and repaired 113,000 cars. The company expects to meet its target of having enough parts to repair all affected cars by October.

Barra said the report makes 90 recommendations for actions that GM should take in eight major areas, without giving specifics. She said the company would act on “all of these recommendations” and already has taken steps toward implementing some of them.

She said GM is continuing to review pending safety issues and expects its flurry of recalls, covering a total of 15.8 million vehicles this year so far, to be “substantially complete” by the end of June.

GM's general counsel, Mike Millikin, who helped lead the investigation, is staying with the auto maker, Barra said.

GM says it has linked 13 deaths and 47 crashes to the defective switches. Lawyers and safety advocates contend that the death and injury toll is far higher.

GM in May admitted breaking federal law and agreed to pay a $35 million fine levied by National Highway Traffic and Safety Adminstration. It has to meet with NHTSA officials monthly to discuss potential safety issues and implementation of the changes recommended by Valukas' report.

Bob Lutz, former GM vice chairman who headed product development, said June 4 during a dinner event at Eastern Michigan University that high turnover and lack of communication in the company caused the faulty ignition switches to go unnoticed.

Lutz said each department in the company knew small aspects of the problem, but employees never came together to look at the big picture.

Nora Naughton contributed to this report.