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Greg Webb
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Investigation of GM Broadens as Company Fights to Rebuild Consumer Trust

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It has taken over ten years, 13 known traffic fatalities, a new CEO, multiple lawsuits and the threat of criminal prosecution to get GM to begin addressing the safety issues and recalls connected to the faulty ignition switch found in older model vehicles. Finally, under federal and public scrutiny, its new CEO, Mary Barra, is moving swiftly to fix problems and try to give us a sense of confidence about GM vehicles. Since March, GM has:

 

  • “Hired Anton Valukas, chairman of the law firm Jenner & Block and not a GM employee, to investigate the company’s response to the recall.
  •  Appointed Jeff Boyer on March 17 to the newly created post of vice president of GM global vehicle safety.
  • Hired Kenneth Feinberg, the lawyer who oversaw compensation of victims of the 9/11 terrorist attacks and BP’s 2010 Deepwater Horizon oil spill, to consider “options” in the automaker’s response to personal injury and wrongful death lawsuits filed in the wake of the ignition-switch recall.
  • Expanded its staff of product investigators from 20 to 55.
  • Agreed to meet monthly with NHTSA officials to review pending safety issues.”  (Detroit Free Press)
  • Terminated the employment of 15 employees and disciplined 5 more in the wake of a 3-month probe by Valukas

We might call these actions commendable but for  the 13 deaths and numerous accidents attributed to the faulty ignition switch and the failure of airbags to deploy. The list looks good until you realize that much of what GM is doing falls under the category of “covering our corporate asses.” GM did not act until the threat of lawsuits and the actions of the NHTSA forced its hand. And even then GM executives dillydallied so long that the Federal government fined it $35 million for failing to report the defect sooner.

We still do not have all the details but it does seem that GM knew about the faulty switch as early as 2001. GM has acknowledged knowing about the defect, saying that only a handful of mid-level employees were aware of problems. But, according to a New York Times article, “…a review of internal documents, emails and interviews paint a different picture, showing that high-ranking officials, particularly in G.M.’s legal department, led by the general counsel Michael P. Millikin, acted with increasing urgency in the last 12 months to grapple with the spreading impact of the ignition problem.”

The federal investigation has widened to include General Motors’ legal department. How many people knew? As I reported earlier there was clearly an atmosphere of cover-up and deceit that existed on all levels at GM. Employees attended seminars on how to properly communicate about safety problems using benign language in order to avoid possible litigation.

Transportation Secretary Anthony R. Foxx is calling for stronger punitive actions. He calls the $35 million fine a ‘slap on the wrist’ (which it is), and is urging Congress to impose a fine of $300 million. Foxx has the support of Senator Blumenthal, D-Conn., who chairs the Senate subcommittee in charge of highway safety. Blumenthal is also working on legislation to change the way that automakers report car safety issues. (CBS News, 5/17)

So far GM has recalled more than 12.8 million vehicles since January of this year. Just with the past two weeks it issued a recall for more than 2.4 million vehicles, in four separate recalls, including Chevrolet Malibus, Cadillac Escalades and other models.   (CBS News, 5/20)    GM is being more diligent about recalls and is carefully reviewing safety records of all its vehicles. But that is not making the public feel any better—performance under duress is always a little suspect. With the NHTSA breathing down its neck, numerous lawsuits, and several ongoing federal investigations, the corporation should be doing everything in its power to address the safety of its vehicles.

GM’s credibility is in the proverbial tank.  It has lost tremendous good will among the American public, which will take years to recover.  The best way for it to recover is to accept responsibility for its actions, and then build good, safe cars.