GM chief says no cover-up in delayed recall

Presenting the results of an internal report (pdf), General Motors (GM) CEO Mary Barra said Thursday the automaker had uncovered a "pattern of incompetence and neglect" in its failure to recall millions of vehicles with faulty ignition switches.

Barra said the investigation, commissioned by GM and undertaken by former U.S. attorney Anton Valukas, "revealed no conspiracy to cover up the facts" or any evidence that employees might have made a trade-off between safety and cost issues. But she also announced that 15 GM employees, many in senior or executive positions, have been fired in relation to the recall, while five others were disciplined.

"Some were removed because of what we consider misconduct or incompetence," Barra said. "Others have been relieved because they simply didn't do enough. They didn't take responsibility, didn't act with any sense of urgency."

Barra also said that GM is setting up a compensation fund for the families of those killed or for people injured as a result of an ignition-switch failure. Attorney Kenneth Feinberg, who handled victim compensation issues following the Sept. 11 terror attacks and the BP (BP) Gulf Coast oil spill, will help establish the fund.

At least 13 deaths have been linked to the ignition-switch defects.

Barra became GM's first female CEO in January of this year, just weeks before the ignition switch recall was announced to the public.

In her remarks during a "town hall" meeting at a suburban Detroit GM plant, she described the Valukas report as "extremely thorough, brutally tough and deeply troubling." And she paraphrased some key points of the report, which is posted on the National Highway Traffic Safety Administration website. The agency said it is reviewing the report and that it will take "appropriate action" regarding the findings and GM's corporate reform as warranted.

Barra said Valukas had "complete independence" in producing the report, noting that the probe involved interviews with more than 230 people and included more than 41 million documents.

Perhaps the most notable finding was that, over an 11-year period, GM personnel failed to properly address or take responsibility for the ignition-switch problem, despite the fact the issue was "touched by numerous parties at GM" but never brought up to the company's highest levels of management.

"Repeatedly, over a decade, GM failed to search for, share or gather knowledge, and that failure had serious consequences," the report by Valukas, an attorney at law firm Jenner & Block, stated. "There are multiple components to these failures, involving individual mistakes, organizational dysfunction, and systems inaccessible to some and impenetrable to many."

This pattern, along with a disconnect between company departments and other misdiagnosed problems "led to devastating consequences," Barra said. One example she cited was how experienced company engineers, who were responsible for safety issues, "didn't understand that the airbags would not deploy if the ignition switch changed position."

The Valukas report said it is difficult to determine to what extent GM's corporate culture was responsible for the failure to recall the faulty ignition switches. But in the case of the Chervrolet Cobalt, "GM personnel failed to raise significant issues to key decision-makers," Valukas and his team concluded. Senior lawyers within the company also did not bring the issue to the attention of GM's general counsel.

"A cultural issue repeatedly described to us and borne out by the evidence is a proliferation of committees and a lack of accountability," the investigators wrote.

The report also says GM employees were instructed to avoid using certain words when writing about safety issues. Rather than describe a problem with a vehicle part as a "defect," for example, workers were directed to say that it "does not perform to design."

The U.S. Transportation Department in May announced it was fining GM $35 million -- the largest civil penalty of its kind -- for delaying the recall of 2.6 million vehicles, due to the ignition switch problems. In April, GM asked a U.S. bankruptcy court to protect the company from legal claims that took place before the auto-maker emerged from bankruptcy in 2009.

A contrite Barra told GM employees that, as much as she hated sharing the report's results with them, "I never want you to forget it."

"I never want to put this behind us," she continued. "I want to keep this painful experience permanently in our collective memories. I don't want to forget what happened because I -- and I know you -- never want this to happen again."