The article below on GM’s response to a very apparent problem with ignition switches in thousands of its cars is yet another lesson in what happens when situational values trump core values.
US Transportation Secretary Anthony R. Foxx said that innocents pay first, in this case with their lives. GM’s inability to be honest and its attempted cover-ups contributed centrally to many deaths.
“Literally, silence can kill,” Mr. Foxx said in a news briefing.
It is in the nature of the core versus situational values contest that it only emerges when stakes are highest. It’s easy to be a moral person when you have little skin in the game. It is also axiomatic that as soon as the headline carries the phrase, “Focus on (the) Lawyers,” situational values have won. When leadership abandons moral accountability to the general counsel’s office it’s a signal that the contest is over.
Inquiry by General Motors Is Said to Focus on Its Lawyers
By BILL VLASICMAY 17, 2014
DETROIT — As General Motors faces a number of continuing investigations into its handling of a vehicle safety defect linked to 13 deaths, its legal department has become a focus of a broad internal inquiry into how the company handled the issue, according to two people with knowledge of the inquiry.
Even as G.M. acknowledged that it knew about the defect for more than a decade, it has insisted that work on defective ignition switches was limited to a handful of midlevel employees.
But 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.
A number of departments in the company stepped up efforts to fix the switches once depositions threatened to ensnare senior officials.
The faulty ignition switch was prone to turn off, shutting the engine of a car and disabling its air bags.
And as the automaker finally began to face up to the issue, G.M. lawyers moved to keep its actions secret from families of crash victims and other outsiders.
G.M. declined to make Mr. Millikin or any other executives available for interviews. Since the recall began, four senior executives have resigned or left the company, including a top engineer, Jim Federico, who avoided being deposed in a lawsuit last summer when G.M. lawyers suddenly settled a case tied to a defective ignition switch.
Despite its agreement on Friday to pay a $35 million penalty imposed by federal regulators, the automaker faces several investigations, including from the Justice Department and the Securities and Exchange Commission, intently focused on whether G.M.’s top officers deliberately ignored the need to fix faulty ignition switches in some of its vehicles.
The toll on management is expected to grow in coming weeks, as a former United States attorney, Anton R. Valukas, concludes an internal investigation that is being closely watched by lawmakers, federal regulators and Justice Department investigators.
Transportation Secretary Anthony R. Foxx said on Friday that G.M.’s unwillingness to share information it had about defective switches with regulators most likely cost lives in accidents.
“Literally, silence can kill,” Mr. Foxx said in a news briefing.
G.M. has said that it knows of 13 deaths tied to the failure of ignition switches, which caused Chevrolet Cobalts and other cars to lose engine power and deactivate air bags.
But the company has conceded that more fatalities could be linked to the problem, even as the number of G.M. employees involved in switch investigations was steadily expanding.
A turning point came in September, when G.M. lawyers unexpectedly approved a settlement of a lawsuit filed by the family of Brooke Melton, a Georgia woman who died in a Cobalt crash in 2010.
Documents show that G.M. restarted its nearly dormant internal investigation because of information brought to its attention in the Georgia case.
Yet from the time that G.M. employees began giving depositions in the case in April 2013 until the end of the year, there have been at least 112 crashes involving the now-recalled vehicles, resulting in 122 injuries and three deaths, according to federal records reviewed by The New York Times. And complaints from owners about vehicles suddenly stalling continued to be made on the safety agency’s website.
It is not clear whether defective switches played a part in any of the accidents. But the crash data and complaints do not appear to have spurred G.M. employees and executives to find answers about the switches until the settlement in the Melton case forced their hand.
G.M. had conducted at least eight separate internal inquiries into switch problems dating to 2004 by the time its chief switch engineer, Raymond DeGiorgio, was deposed in the Melton case on April 29, 2013.
Mr. DeGiorgio testified to the Melton family’s lawyer, Lance Cooper, that he had never approved a change in the switch, despite evidence presented by Mr. Cooper that G.M. made significant upgrades to the part sometime in 2006.
Documents later obtained by regulators from G.M., however, show that Mr. DeGiorgio did authorize major changes to the switch in 2006.
Three other midlevel employees — Gary Altman, Brian Stouffer and Victor Hakim — were deposed in the weeks after Mr. DeGiorgio. It would have a sizable effect on their careers: Mr. Altman and Mr. DeGiorgio were suspended with pay after the recall, and Mr. Stouffer retired. Of the four, only Mr. Hakim is actively employed at G.M.
G.M.’s legal department was also asked to produce documents about a possible switch alteration, but by last July, it had failed to do so. About the same time, the head vehicle defect investigator for the National Highway Traffic Safety Administration sent G.M. a letter, dated July 23, with a blunt accusation: The company was slow to act on a number of safety problems.
The letter was circulated widely among prominent G.M. executives with safety responsibilities, including two vice presidents for product, John Calabrese and Alicia Boler-Davis, who is now G.M.’s chief quality officer. Also included were the company’s vice president for regulatory affairs, Michael Robinson, and a top engineer, Mr. Federico.
A copy of the letter also went to Gay Kent, G.M.’s director of product investigations, who had been involved in safety issues relating to the Cobalt as far back as 2006. Another copy was sent to William Kemp, one of the automaker’s top product liability lawyers. While the letter plainly stated that G.M. was delinquent on resolving safety issues, it did not galvanize the company to address the switch defect.
That happened only after Mr. Federico was on the verge of testifying under oath in the Melton case.
Mr. Federico, an executive engineer who supervised hundreds of employees in G.M.’s small cars program, was scheduled to be deposed on Aug. 23. His testimony, it became clear, had the potential to crack G.M.’s wall of secrecy on the switches.
For more than a year, Mr. Federico was in charge of an internal investigation into the troubled switch and had sought recommendations from staffers on how to fix it. He was also a top lieutenant to Mary T. Barra, G.M.’s chief executive who, at the time, served at its global product development chief.
Then, the day before Mr. Federico was to be deposed by Mr. Cooper, the lawyer representing the Melton family, G.M.’s legal department stopped his testimony in its tracks.
After fighting the lawsuit for more than two years, G.M. lawyers made a surprise offer to mediate and settle the case. After first rejecting a settlement figure proposed by the Melton family, a G.M. official, Trish Jankowski, turned around and accepted the deal.
It was the fifth confidential settlement approved by G.M. lawyers in fatal accidents involving vehicles equipped with defective ignitions.
But the legal strategy could not control the damage at G.M. much longer.
Only after the settlement was completed in September did G.M. set in motion events that would lead to its huge recall.
A product investigator deposed in the case, Mr. Stouffer, contacted the switch’s supplier, Delphi, in mid-October for information about the switch.
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“It’s been a long time since we communicated,” he wrote to a Delphi executive, Gary Greib. “I am working on an investigation for the Chevrolet Cobalt and was looking for some help.”
Over the next two weeks, a team of Delphi employees dug up the evidence that had eluded G.M. on its own for years. “Hey Brian,” Mr. Greib wrote to Mr. Stouffer on Oct, 29. “We believe we found the change records.”
Those records showed conclusively that the ignition switch in G.M.’s small cars had been drastically improved in 2006 without a corresponding change in the part’s identification number.
More important, no safety recall had been ordered at the time for vehicles equipped with the original, faulty switch.
That discovery was then circulated to an undetermined number of G.M. employees involved in evaluating the need for a recall.
By the time a senior safety committee met in mid-December, employees in several G.M. departments — including engineering and regulatory affairs as well as product investigations and legal — had some knowledge of the switch problems.
Still, it was not until Jan. 31 that, by Ms. Barra’s account, she and other top managers learned of the defective switch. That day, the committee finally ordered the recall.
Danielle Ivory contributed reporting from New York.
A version of this article appears in print on May 18, 2014, on page A1 of the New York edition with the headline: Inquiry by G.M. Is Said to Focus on Its Lawyers. Order Reprints|Today’s Paper|Subscribe