For lawmakers trying to find out who to blame for the lack of
responsiveness by GM and its regulator to the tragedies, and in
particular the multi-year delay in recalling potentially dangerous
vehicles off the roads, it may turn out to be a frustrating couple
GM <GM.N> built a system to deliberately keep senior executives out
of the recall process. Instead, two small groups of employees in the
vast GM bureaucracy were tasked with making recall decisions, a
system GM says was meant to bring objective decisions.
It means that lawmakers may also focus on asking who is responsible
for a system that failed so badly that there weren't red flags
raised for those higher up the food chain.
"In this day and age, to think that stuff like this can be kept
quiet or forgotten is ridiculous," independent auto analyst and
author Maryann Keller said. "The right question to ask is who knew,
when did they know and why was this not brought forth to be dealt
with. Did they hope that it was just going to go away?"
The company has recalled 1.6 million cars for a problem first noted
in 2001, spurring the congressional enquiries as well as
investigations by federal safety regulators, who will also testify,
the Justice Department, and GM itself.
GM has said that Barra and other top executives did not learn of the
defective switches until January 31, explaining that smaller groups
of lower-level executives within the company are responsible for
leading a recall. Some executives who might use this argument
include former CEO Rick Wagoner and his immediate successor Fritz
Henderson, who have not discussed the matter publicly.
"The process here is supposed to be drilling deep into the data and
objectively looking at this and having peer groups question it, and
senior management and leadership's influence on that is not a
healthy thing," global product development chief Mark Reuss said
GM spokesman Jim Cain GM spokesman said the company was not yet
commenting on why the decision to recall took as long as it did. GM
is still investigating, he added.
Within the GM community, several former executives contacted by
Reuters were asking why the ignition switch problem did not catch
the attention of company attorneys, engineers and employees who
worked with the dealers and processed warranty claims.
"Why did these dots not get connected? Or worse, if they were
connected, why did it take so long to do something?" said one former
executive with experience in service matters, who asked not to be
identified and had not heard of the issue while it was developing.
When the ignition switch in older-model cars, including the
Chevrolet Cobalt and Saturn Ion, is jostled, a key could turn off
the car's engine and disable airbags and other components, sometimes
while traveling at high speed.
"Safety-related issues always got elevated attention," said a former
GM engineering executive. "Something like engine stalls would get
Lawmakers will "ask questions that will hold people accountable for
the terrible accidents that have occurred," Representative Henry
Waxman of California, the senior Democrat on the House Energy and
Commerce Committee, which is conducting that chamber's investigation
of GM, told Reuters.
Barra will testify in the House on Tuesday and in the Senate on
Barra and the acting head of the National Highway Traffic Safety
Administration, David Friedman, are not only likely to face a
barrage of questions from skeptical lawmakers. They may also have to
deal with accusations from victims' families, some of whom plan to
attend the hearings.
INSIDE GM'S RECALL PROCESS
For more than a decade the company carried out engineering and field
evaluation inquiries to track the problem, according to a timeline
that GM filed with regulators. That document and others also suggest
a failure to share information within the company.
GM first learned of the issue in 2001 during pre-production of the
Ion, and it issued so-called service bulletins to dealers with
suggested remedies in 2005.
A February 2005 bulletin suggested dealers look for short drivers,
who would be more likely to bump the steering wheel column,
according to GM documents filed in a California lawsuit.
Meanwhile, in a GM document introduced last year in a Georgia
lawsuit, 6-foot-3-inch GM engineer Onassis Matthews said he
inadvertently turned the ignition key off with his knee while test
driving a Saturn Ion in February 2004. Matthews suggested moving the
ignition key to a different location.
As fatal accidents were reported, they were not always discussed
In March 2007, NHTSA officials told a group of GM employees of a
fatal Cobalt crash in July 2005. GM's legal team had opened a file
in 2005, two months after the crash, but the automaker's employees
at the 2007 meeting with NHTSA were not aware of it.
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In August 2011, an engineer was assigned to track a group of Cobalt
and Pontiac G5 crashes in which the airbags did not deploy, but the
process failed to include crashes involving Ion cars that resulted
The issue was elevated to the two committees responsible for
calling for recalls in 2013. GM declined to say if the committees
had looked at the issue previously.
"Product recalls was a closely held activity," said a former
executive in the global product development organization.
The system served two purposes. First, it put a group of experts in
charge of the decision. Second, it kept news of potential recalls
from leaking, the person said.
One small group would vet incoming data and decided if a recall was
warranted, then make a recommendation to an even smaller group in
charge of approving the recall. If the second group approved a
recall, the recommendation would then go to senior management.
Jim Heller, chair of the products liability practice at Philadelphia
law firm Cozen O'Conner said top executives "can't be involved in
every consumers' complaint, regardless of merit."
However, Heller, who does not do work for GM, added a growing
problem that would affect a company's earnings and public relations
should have been communicated to senior management.
GM's 2009 bankruptcy may also be part of the explanation, since it
led to an exodus of executives, including Wagoner and Henderson,
both of whom were forced out.
Members of Congress, as well as safety advocates, want to know
whether senior GM executives may have learned of the issue long
before it surfaced in late 2013 and led to last month's recall.
Wagoner declined to comment through a spokesman, while Henderson
could not be reached. Former North American chief Gary Cowger also
could not be reached to comment.
GM's former general counsel, Thomas Gottschalk, referred questions
to the company, and GM said its current top legal executive Michael
Millikin, who was previously the No. 2 executive in the department,
also did not learn of the defective ignition switches until January
31. He is co-leading GM's internal probe.
Lori Queen, who was previously in charge of GM's small car
engineering when the Cobalt was introduced, said she and her husband
James, who was in charge of global engineering, would not comment.
Former purchasing chief Bo Andersson, who is now CEO of Russia's
largest automaker Avtovaz <AVAZ.MM>, also declined to comment.
A company spokesman said GM's vice president of global product
development Doug Parks, who was chief engineer for the Cobalt and
Ion, was not commenting.
The two Congressional committees are likely to decide on additional
hearings and witnesses after they digest GM and NHTSA documents they
have received and the information gleaned from next week's hearings.
LESSONS TO LEARN
Barra has repeatedly apologized for the company's handling of the
matter and said GM would focus on taking care of customers and
company officials have stressed cooperation in all investigations.
She may get some credit from lawmakers for that attempt at
GM's CEO "gets high marks for admitting wrongdoing. On the other
hand, she hasn't been there very long," said Senate Commerce
Committee Chairman Jay Rockefeller, a West Virginia Democrat, who is
overseeing the Senate hearing.
The senator said he would look at documents and listen to testimony
before deciding about GM, and that the committee would be looking
for explanations. "You have to have lessons," he said.
(Additional reporting by Paul Lienert in Detroit and Megan Davies in
Moscow; editing by Peter Henderson)
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