Barra has played the best hand possible given the cards and GM’s tenuous legal position. But she is swimming with polemical and political sharks.
If you thought the first round of Congressional hearings was tough on GM and its CEO Mary Barra – particularly in the Senate – wait until tomorrow when The House Subcommittee on Oversight and Investigations holds a sequel called, “The GM Ignition Switch Recall: Investigation Update.” General Motors CEO Mary Barra and Anton Valukas of the legal firm Jenner & Block, who headed the company’s internal ignition switch recall investigation, will be the only witnesses.
Complicating things here are GM’s latest ignition switch recalls announced on Monday covering 3.16 million 2000-2014 model year cars in the U.S. because the ignition switch may move out of the “run” position.“Although everyone had responsibility to fix the problem, nobody took responsibility,” Mr. Valukas wrote in the internal investigation.
Now here comes Round Two. Was the House embarrassed by its soft (relatively speaking compared to a subsequent Senate hearing in Round One) and, if so, will this be a lot tougher? The Valukas report has been criticized as the best report GM could buy since it is a cleverly crafted legal document that claims top management knew nothing about a safety defect that was known inside GM going back to the last century.
“Earlier this year, Ms. Barra testified that she would not be able to answer certain questions until the company’s internal investigation was complete,” said full committee Chairman Fred Upton (R-MI) and Oversight and Investigations. He added, “We will have the chance to get those answers and compare the company’s findings to our own.”
Subcommittee Chairman Tim Murphy (R-PA). “Mr. Valukas’ exhaustive report revealed disturbing truths about GM’s systemic and cultural failures that allowed this problem to go undiagnosed for over a decade, but many questions remain unanswered about the recalls and resulting changes within the company. This testimony by Barra and Valukas is a critical step in our ongoing investigation to uncover the facts as we determine what went wrong and what we can do to prevent future tragedies.”
Barra’s conclusion in her prepared remarks says, “And I am not going to accept business as usual at GM. It’s time — in fact, it’s past time — to debunk the myths in our company so we can unleash the full power of our 200,000 employees, our 21,000 dealers and our 23,000 suppliers. We are a good company, but we can and must be much better. That’s my focus and that’s my promise to you, our employees, our customers, our shareholders and the American people.”
Then of course, the questioning from the committee will begin, with no doubt some political posturing from a do nothing Congress. This give elected representatives the chance to appear to be doing something. Good politics, but likely bad policy making.
To date, the committee says it has received more than 1 million pages of documents from GM and another 15,000 from NHTSA. It conducted a number of interviews with key company officials and government regulators. The people analyzing these documents – young staff lawyers on the make in DC – likely have no technical background.
Written Testimony as prepared of Anton R. Valukas, Jenner & Block before the Committee on Energy and Commerce Subcommittee on Oversight and Investigations United States House of Representatives
Chairmen Murphy and Upton, Ranking Members DeGette and Waxman, and members of the Committee: Thank you for having me here to testify about my report on the Cobalt ignition switch. In March of this year, GM asked me to determine why it took so long to recall the Cobalt and other vehicles that contained the faulty ignition switch. I approached this task in much the same way that I did in conducting my review of the Lehman Brothers matter, albeit on a much more expedited timetable. My job was to find the facts as to how and why this occurred and set forth those facts in a report. Jenner & Block was given unfettered access to GM witnesses and documents and was asked for an unvarnished account. We interviewed more than 230 witnesses and collected more than 41 million documents. We obtained and reviewed forensically imaged hard drives, including those belonging to top executives. We searched server-based e-mails and shared drives, electronic databases, and hundreds of boxes of hard-copy documents, all in an effort to identify any documents that would bear on our assignment to find out why the Cobalt recall was delayed for so many years. If we discover any new information that materially affects our report, we will supplement our findings to the Board.
In our report, we did not simply repeat what any individual GM employee told us. We tested those assertions against the extensive documentary record we gathered and against the statements of other witnesses. I will not summarize the report in any detail — it speaks for itself. I will, however, highlight a few broad conclusions that tie directly to our recommendations. – GM personnel approved the use of an ignition switch in the Cobalt and other cars that was far below GM’s own specification.
This was done by a single engineer and was not known by those who were investigating the Cobalt from the time of the approval until 2013. From the time it .first went into production, the Cobalt (and the Ion before it) had problems because the ignition switch could too easily be turned to Accessory, resulting in a moving stall including the loss of power steering and power brakes. GM engineers were fully aware of this problem but did not consider it a safety issue. That conclusion was the wrong one —amazingly, the engineers investigating the Cobalt in 2004 and 2005 did not understand that, when the key turned to Accessory, the airbags would fail to deploy. Because GM personnel failed to understand the potential hazard caused by the ignition switch, GM engineers debated through various committees whether any of the potential fixes were cost-effective. This focus on cost was driven by the failure to understand that a safety defect was at issue and the consequences of that defect.
In 2006, the engineer who authorized the below-specification switch in the first place increased the torque in the ignition switch by authorizing a change to the switch. He approved a change to the switch, but did not change the part number, thereby concealing the change and leading to years of confusion among investigators about why, if the ignition switch was mechanically the same in all model years, accident data was so markedly different before and after Model Year 2008.
GM personnel began recognizing the problem of non-deployment of airbags in the Cobalt as fax back as 2007, but failed to take advantage of all the resources at their disposal — including information in GM’s own databases — to understand that the non-deployment was related to the known problem of the ignition switch. Others —outside GM —made this connection as early as 2007. But, as fatalities and injuries mounted in cases in which airbags did not deploy in Cobalts, GM personnel displayed no sense of urgency in determining the cause. – By 2011, GM personnel knew that there was a pattern of non-deployments in Cobalts and that the ignition switch might be to blame. GM’s outside counsel warned GM that it might be liable for punitive damages for failing to deal with the problem for so many years. But, once again, GM personnel failed to display any sense of urgency. The nondeployment investigation languished, even as it became more and more clear that the ignition switch was the problem. And the investigation was further delayed when the engineer who originally approved the faulty switch told GM safety engineers that he had never changed the switch, when, in truth, he had.
By 2013, the investigation had not progressed, and it was only when an outside expert hired by a plaintiff’s lawyer took the switches apart and compared them that GM personnel finally understood that the switch had been changed. Even then, however, GM took another 10 months to recall the Cobalt.
The story of the Cobalt is one of a series of individual- and organizational failures that led to devastating consequences. Throughout the decade that it took GM to recall the Cobalt, there was a lack of accountability, a lack of urgency, and a failure of company personnel charged with ensuring the safety of the company’s vehicles to understand how GM’s own cars were designed.
We found failures throughout the company —including individual errors, poor management, byzantine committee structures, lack of training, and inadequate policies. In our report, we review these failures, including cultural issues that may have contributed to this problem, and we provide recommendations to ensure that it never occurs again.
So. I understand that while this report answers many questions, it leaves open others: Government officials (and perhaps judges and juries) will assess the credibility of witnesses and whether there was civil or criminal culpability; GM will have to make decisions about how to ensure that this never happens again; Others, whether courts or Mr. Feinberg, will make decisions about which specific accidents were caused by the Cobalt’s faulty ignition switch. Our role was to find the facts as to why this recall took far too long. I believe we have done
Prepared Testimony of Mary T. Barra before the Subcommittee on Oversight and Investigations House Committee on Energy and Commerce 18 June 2014
Thank you, Mr. Chairman. I appreciate the chance to appear before you again today on the ignition switch recall issue. When I was here 11 weeks ago, I told you how we intended to proceed with this matter. I promised that we would conduct a comprehensive and transparent investigation into the causes of the ignition switch problem. I promised we would share the findings of the report with Congress, our regulators, NHTSA, and the Courts. I promised we would hold people accountable and make substantive and rapid changes in our approach to recalls. Finally, I promised we would engage Ken Feinberg to develop a just and timely program for compensating the families who lost loved ones and those who suffered serious physical injury. We have done each of these things and more. And I welcome the opportunity to discuss them with you further.
The Valukas report, as you now know, is extremely thorough, brutally tough and deeply troubling. It paints a picture of an organization that failed to handle a complex safety issue in a responsible way. I was deeply saddened and disturbed as I read the report. For those of us who have dedicated our lives to this company, it is enormously painful to have our shortcomings laid out so vividly. There is no way to minimize the seriousness of what Mr. Valukas and his investigators uncovered.
On June 2, Mr. Valukas presented the findings of his investigation to the Board of Directors of General Motors. I will leave it to Mr. Valukas to comment on his report. For my part, I want you to know my reaction to the report and some of the actions I have taken since receiving it.
1. After reviewing the Valukas report, we made a number of personnel decisions. Fifteen individuals identified in the report are no longer with the company.
2. We have restructured our safety decision-making process to raise it to the highest levels of the company, addressing a key point in the Valukas report that critical information was kept from senior management. Under the new system, that problem should never be repeated.
3. We announced the creation of, and have implemented, a new Global Product Integrity organization that will enhance our overall safety and quality. And, we are taking an aggressive approach on recalls as we are bringing greater rigor and discipline to our analysis and decision making process regarding recalls and other potential safety-related matters. This is difficult, but it is absolutely the right thing to do. As I have told our employees, this is the new norm.
4. As we discussed last time, we engaged Ken Feinberg to review options for establishing a compensation fund, and that process is moving forward rapidly. Mr. Feinberg has full authority to establish eligibility criteria for victims and determine compensation levels. He has indicated he will share the final criteria with us by the end of the month. We also expect to begin processing claims by August 1.
5. We created a new position of VP of Global Safety and appointed Jeff Boyer, a highly respected expert in the field, to the position. I have personally told Jeff he will have whatever resources he needs to do this job. In fact, we have named a senior attorney to serve as his chief legal adviser.
6. We added 35 safety investigators that will allow us to identify and address issues much more quickly.
7. We instituted a Speak Up For Safety program encouraging employees to report potential safety issues quickly. And we are going to recognize employees when they do so. More than a campaign or program, it’s the start of changing the way we think at GM.
Two weeks ago, I purposefully addressed an audience of 1,200 employees at our Vehicle Engineering Center about the report. This address was simultaneously broadcast to all GM facilities around the world. I told our team as bluntly as I knew how, that the series of questionable actions and inactions uncovered in the investigation were inexcusable.
I also told them that while I want to solve the problems as quickly as possible, I never want anyone associated with GM to forget what happened. I want this terrible experience permanently etched in our collective memories. This isn’t just another business challenge. This is a tragic problem that never should have happened. And it must never happen again. This report makes a series of recommendations in eight main areas. I have committed the company to act on all of the recommendations, and we are moving forward on many of them already.
Finally, Mr. Chairman and Members of the Committee, I know some of you are wondering about my commitment to solve the deep underlying cultural problems uncovered in this report. The answer is I will not rest until these problems are resolved. As I told our employees, I am not afraid of the truth. And I am not going to accept business as usual at GM. It’s time — in fact, it’s past time — to debunk the myths in our company so we can unleash the full power of our 200,000 employees, our 21,000 dealers and our 23,000 suppliers. We are a good company, but we can and must be much better. That’s my focus and that’s my promise to you, our employees, our customers, our shareholders and the American people.
Thank you again for having me here today. I am pleased to take your questions.
Mrs. Barra is going to come out smelling like a rose. She shows compassion and willingness to fix the issues. This makes us honest men look like a bunch of over stuffed buffoons. I hope the men working in the auto industry learn from these hidden failures and stand up to the plate and come forward to help fix the issues. Rather than waiting to be told to fix the issues from the lawyers. Things like this is why men are being pushed aside in the family as well. It’s time to get right with God and your family to start to turn this embarrassing mess behind us.