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Originally published June 5, 2014 at 5:54 PM | Page modified June 6, 2014 at 6:50 AM

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GM ousts 15 over ignition-switch scandal


The New York Times

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WARREN, Mich. — An internal investigation by General Motors found “a pattern of incompetence and neglect” in its decadelong failure to recall millions of defective small cars but concluded that there was no deliberate cover-up, the company’s chief executive said Thursday.

Mary Barra, the chief executive, said 15 employees had been dismissed, most in senior and executive roles, and five others had been disciplined. But despite the broad findings, the report did not tie Barra and her top lieutenants to the recall delay that GM has linked to 13 deaths and 47 crashes.

“Repeatedly, individuals failed to disclose critical pieces of information that could have fundamentally changed the lives of those impacted by a faulty ignition switch,” she said. “If this information had been disclosed, I believe in my heart the company would have dealt with this matter appropriately.”

She did not say who the discharged employees were, nor which departments they worked in. She said only that “more than 50 percent” were executives, and that two who had been suspended were dismissed. In April, two midlevel engineers, Raymond DeGiorgio and his supervisor, Gary Altman, were placed on paid leave. Both had been deposed last year in a lawsuit filed against GM by the family of a Georgia woman who died in a Cobalt crash in 2010.

The report, which is being given to federal regulators and Congress on Thursday, was the result of an investigation overseen by Anton Valukas, a former U.S. attorney. Saying that Valukas had “complete independence” to conduct his inquiry, Barra said that it included more than 350 interviews with more than 230 people, and a review of millions of documents.

Outlining the findings, Barra painted a picture of a company where employees failed to act on knowledge that they knew to pose a danger.

“Numerous individuals did not accept any responsibility to drive our organization to understand what was truly happening,” she said. “The report highlights a company that operated in silos, with a number of individuals seemingly looking for reasons not to act, instead of finding ways to protect our customers.”

She said that the failure to act continued up to the decision on Jan. 31 to begin the recall, which would grow to nearly 2.6 million cars.

“Throughout the entire 11-year history, there was no demonstrated sense of urgency, right to the very end,” she said.

She also announced that GM would put in place a long-awaited compensation program for victims, to begin on Aug. 1, administered by Kenneth Feinberg, a lawyer who ran compensation programs for BP and World Trade Center victims. The details, she said, are to be completed in the coming weeks.

The release of the internal investigative report was expected to be a turning point in a safety crisis that has consumed General Motors since Feb. 14, when the automaker began a broad recall of millions of small cars equipped with defective ignition switches.

The automaker has said the number of fatalities and crashes linked to the defect could increase as it gathers more information.

Barra has consistently maintained that she and other senior executives first learned of the switch problems on Jan. 31 — the day that an internal safety committee ordered the initial recall.

Barra didn’t directly answer a question about whether she should have figured out the switches were a deadly problem. Before becoming CEO in mid-January, she was product-development chief for three years, and safety reported to her through GM’s chain of command.

“I wish I had known, because the minute we knew, we took action,” she said.

The 34-year GM veteran told 1,000 employees gathered at the automaker’s suburban Detroit technical center that the report was “enormously painful.”

“I hate sharing this with you just as much as you hate hearing it,” Barra said in a speech that was also broadcast to the company’s 212,000 employees worldwide. “But I want you to hear it. I want you to remember it. I want you to never forget it.”

And more trouble could lie ahead: Federal prosecutors are investigating and could bring criminal charges that carry billions of dollars in fines. GM also faces numerous lawsuits from crash victims and from owners whose say their cars have lost value. A Wall Street analyst projected GM’s legal costs from the problem at about $2.5 billion.

Barra, who testified on Capitol Hill in April but deflected many questions by saying she was waiting for the results of Valukas’ investigation, will be called back.

Sen. Claire McCaskill, D-Mo., said she intends to hold a hearing 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.”

Material from The Associated Press is included in this report.



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