Detroit Free Press
DETROIT — General Motors CEO Mary Barra has fired 15 employees and ordered a compensation plan for victims of a deadly ignition switch defect that the company ignored for more than a decade, after an internal investigation showed a “pattern of incompetence and neglect.”
Barra told GM employees Thursday that an internal investigation conducted by outside lawyer Anton Valukas was “deeply troubling” and showed a broken culture.
Among those who lost their jobs was engineer Ray DeGiorgio, who quietly authorized the ignition switch redesign in 2006 and has been accused of committing perjury. Barra declined to identify the other 14 terminated employees, but she did say they were from four functional areas of the company.
Barra confirmed plans to compensate victims of crashes that involved deaths and injuries in small cars such as the Chevrolet Cobalt and Saturn Ion. GM has identified 13 deaths linked to the defect.
GM hired 9/11 compensation fund head Kenneth Feinberg to determine criteria for settlements with crash victims and their families.
“I realize there are no words of mine that can ease their grief and pain,” Barra said. “I can tell you the report is extremely thorough, brutally tough and deeply troubling. For those of us who have dedicated our lives to this company, it is enormously painful to have our shortcomings laid out so vividly. I was deeply saddened and disturbed as I read the report.”
Feinberg will have the power to determine the amount of the compensation for GM crash victims. He said Tuesday that he’s “weeks away” from offering specific recommendations. Analysts say they believe it could cost billions of dollars.
Asked whether GM would assert a liability shield granted by U.S. Bankruptcy Court in 2009 if any of those victims declined Feinberg’s settlement, President Dan Ammann said twice that they’ll have the same legal rights that they have today.
He did not directly answer whether GM would seek protection from such lawsuits.
Valukas interviewed more than 230 people, including former GM employees, and reviewed some 41 million documents, Barra said.
GM did not immediately release the report. It was provided to the National Highway Traffic Safety Administration.
Nearly five months into her tenure, Barra conveyed the automaker’s fresh commitment to safety and quality amid accusations that a rigid bureaucracy allowed a deadly defect to fester.
Valukas found that GM officials failed to communicate effectively about the defect and did not alert senior executives to the issue, Barra said.
“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,” she said.
Barra pledged to follow Valukas’ recommendations for internal restructuring, saying she has already implemented several initiatives, including the hiring of global safety chief Jeff Boyer.
She called on employees to alert executives when they discover a safety issue that’s not being reported.
“If you are aware of a potential problem affecting safety or quality and you don’t speak up, you are a part of the problem,” Barra said. “If you see a problem that you don’t believe is being handled properly, bring it to the attention of your supervisor. If you still don’t believe it’s being handled properly, contact me directly.”
The defect was relatively simple. The ignition switch could be jostled, either by a driver’s knee or by the weight of multiple attachments on a key chain, causing it to slip into accessory mode, cutting off electricity to power steering, air bags and other features. GM engineers discovered the problem no later than 2004, but decided not to order a recall because of the cost.
Barra has maintained she was notified about the issue in late January when GM safety officials recommended a recall — and National Highway Traffic Safety Administration investigators found no records to dispute her claim.
“I wish I had known,” Barra said
But other high-level GM executives knew about the problem. For example, former engineering executive Lori Queen was told about the problem in 2005, and former engineering executive Jim Federico became aware of the issue in 2012, according to internal GM documents.
DeGiorgio authorized a fix to the Delphi-manufactured switch in 2006, but testified in a 2013 deposition that he did not remember doing so.
GM finally issued a recall in February. The situation has spawned investigations by the U.S. Justice Department, NHTSA, congressional subcommittees and the Securities and Exchange Commission.
NHTSA levied its maximum $35 million fine on GM last month for failing to report the defective ignition switches in a timely manner.
GM and its dealers are replacing the defective ignition switches. The company has said it could take until October to repair all 2.6 million vehicles. Barra said Thursday that so far more than 113,000 have been repaired.