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GM fires 15 over faulty switch; hires expert to oversee victim compensation

Fri., June 6, 2014

General Motors President Dan Ammann, left, CEO Mary Barra and Executive Vice President Mark Reuss hold a news conference in Warren, Mich., on Thursday. (Associated Press)
General Motors President Dan Ammann, left, CEO Mary Barra and Executive Vice President Mark Reuss hold a news conference in Warren, Mich., on Thursday. (Associated 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.

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.


 

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