- Apr 2, 2014
Senators condemn General Motors' ongoing 'culture of coverups'
Despite much rhetoric about a reformed corporate culture at General Motors, several US senators said Wednesday the company's new leaders are behaving a lot like the old ones.
GM CEO Mary Barra worked to distance herself from a problem that originated more than a decade ago.
In a hearing filled with barbed exchanges Wednesday, the ranking member of the Senate Commerce Committee accused GM of engaging in a "culture of cover up," for its role in hiding a deadly defect for more than a decade. Sen. Claire McCaskill (D-Mo.) said the company had purposely hindered disclosure of an ignition-switch defect that has killed at least 13 motorists.
Even as General Motors CEO Mary Barra worked to distance herself from a problem that originated more than a decade ago by differentiating between an old corporate culture and a newer, more safety-oriented one, other members of the Senate Commerce Committee said the company's leadership has continued to stymie the safety interests of millions of motorists and conceal problems in recent months.
"Even under the 'new' GM, it took the company nine months to take action after this egregious violation of public trust," McCaskill said, noting companies are supposed to recall defective vehicles within five days of learning of safety defects.
In one of the most contentious portions of the hearing, McCaskill charged that a senior General Motors engineer perjured himself during testimony last year in a lawsuit related to the ignition-switch flaw. The engineer, Ray DeGeorgio, claimed under oath that he had no knowledge of a change in ignition-switch parts when documents later revealed he signed a form ordering a parts change.
Later, McCaskill said GM had worked to conceal the documents from that lawsuit and keep it hidden from others involved in litigation over deaths and injuries related to the defect. "This is what corporations in America do," she said. "They hide documents."
A separate investigation conducted by the Department of Justice will likely examine the company's criminal culpability.
Sen. Richard Blumenthal (D-Conn.) told Barra that he believed the affected vehicles are dangerous to drive until they are fixed, despite company assurances to the countrary, and that he believed GM's actions warranted charges of criminal wrongdoing.
"The more I hear and see in these documents and the more I learn about what happened ... the more convinced I am that GM has a real exposure to criminal liability," he said. "I think it's legal and appropriate that GM will face prosecution."
A separate investigation conducted by the Department of Justice will likely examine the company's criminal culpability. A DOJ investigation into an auto safety crisis is unusual, but just a short while ago, the department completed a four-year investigation of Toyota that resulted in a $1.2 billion settlement for the company.
Wednesday marked the second consecutive day of testimony for Barra, who had earlier appeared before the House Subcommittee on Investigations and Oversight. Like she did the day before, she deferred answering many questions, saying she wanted to wait until an internal review being conducted by former U.S. Attorney Anton Valukas is complete.
Senators from both political parties were frustrated by Barra's inability and unwillingness to offer direct answers to their questions. Despite her assertions the company had changed its culture to one that favored safety, they were angered by her inability to commit to creating a victims compensation fund, her refusal to support new legislation that would provide more safety transparency for consumers, and her refusal to hold anyone within the company accountable thus far.
Regarding DeGeorgio, McCaskill said, "For the life of me, I can't understand why he still has his job. He perjured himself under oath."
Sen. Marco Rubio (R-Fla.) said, "If I owned a restaurant, and poison was one of the ingredients, and I wouldn't change the recipe because it's not cost effective, I would go to jail."
Sen. Barbara Boxer (D-Calif.) perhaps had the sharpest personal words for Barra, saying that she was disappointed that a 33-year employee of General Motors who held several high-ranking positions had such little knowledge of the problem, which documents show was first detected in 2001, four years before the affected cars even went on sale.
"You're a really important person to this company," Boxer said. "It's strange that such a top employee would know nothing."
Over the past two months, more than 2.6 million cars have been recalled worldwide due to the defect, which can turn off the engines and airbag systems while the cars are in motion. At least 13 deaths have been blamed on the problem, according to GM, as well as 31 car accidents. Replacement parts for affected vehicles should begin arriving at dealerships next week, and GM says there should be enough parts for all affected cars by October.
Rattling off memories of automotive safety crisis as far back as the Ford Pinto, Sen. Ed Markey (D-Mass.), Blumenthal and Boxer asked Barra to support two pieces of legislation that would enhance motorist safety and make more information available to consumers.
The first is legislation Markey and Blumenthal introduced last week, which would widen the scope of data available to the National Highway Traffic Safety Administration and make it more transparent to the public. The second is legislation Boxer sponsored last year that would prevent rental car companies from loaning cars with outstanding recalls that haven't yet been repaired.
In the second case, Barra said she wanted time to read the full legislation, Boxer snapped that she should have read it already since it had been pending for a year. In the former case, Markey accused Barra of continuing a long industry tradition of fighting safety legislation.
Five times, Markey asked Barra if she would support various portions of his legislation. Barry would not commit her support, only saying that GM's legal team would review the legislation and give its input.
"I am very troubled that you are not willing to commit to ending this culture of secrecy at General Motors," Markey said.
"I didn't say that," Barra replied.
"Yes, you have," Markey said. "And I know this, because I have tried year after year – for more than 10 years – to have legislation passed that would require the disclosure of all this information, and it was the automobile industry that killed my legislation year after year. This is the moment now, for you to say more than, 'I'm sorry.'"
Pete Bigelow is an associate editor at AOL Autos. He can be reached via email at firstname.lastname@example.org and followed on Twitter @PeterCBigelow.