Mary Barra, CEO of General Motors Co., testified before a Senate panel on her company’s decision to not issue a replacement for the faulty ignition switches that led to 31 crashes and 13 deaths. The Wednesday hearing wrapped up two days of hard questions on the ethics behind GM not authorizing a repair that would have cost the company about 57 cents in parts per vehicle.
According to a document obtained by Reuters, GM’s decision to not replace the ignition switch was made out of concern that a change in the ignition would incur an additional tooling cost of 90 cents per switch, or $400,000 in total.
The faulty switch — which had a loose locking pin that could become disengaged with keys connected to heavy keychains or while driving on bumpy roads, causing the car to go to “off” or into “accessory” mode while driving and deactivating the airbags — was found in the Chevrolet Cobalt and the Saturn Ion, among other makes and models.
During the two days of hearings, GM’s history of cost-over-safety philosophies and half-truths were laid out. On Wednesday, Sen. Claire McCaskill (D-Mo.), chair of the Senate Subcommittee on Consumer Protections, focused on an April 2013 court case of a Georgia woman that was killed in a Cobalt in 2009. During that case, a GM engineer testified in a disposition that, as switch engineer for the Cobalt, he had never approved an ignition change. However, GM internal documents showed the engineer personally signing off on the change in April 2006.
“He lied,” McCaskill told Barra.
Throughout the Senate hearing and Tuesday’s House hearing, Barra avoided giving specific answers to the legislators’ questions, citing the conclusion of an internal investigation. While, as Sen. Kelly Ayotte (R-N.H.) pointed out, GM’s activities, particularly its retention of the defective part number, which would allow the faulty part to be ordered for new repairs, reflected “criminal behavior,” there’s no clear answer to the question of how GM can be punished.
GM is immune from prosecution or litigation regarding issues that pre-date the company’s 2009 bankruptcy. As such, even if GM admits to negligence in its handling of the ignition switch recall, the company cannot be held responsible without an act of Congress. Many are currently arguing that the bankruptcy settlement that GM agreed to can be challenged on the grounds that GM knowingly misled the bankruptcy administrators about the recall, going as far as to quietly settle existing lawsuits to prevent news of the faulty part from surfacing.
“Corporate executives made a decision that fighting the problem was cheaper and easier than fixing the problem,” said Laura Christian, whose daughter, Amber Marie Rose, died in 2005 when the airbag in her Cobalt failed to trigger when she hit a tree. “Please help us pass legislation to make sure that this never happens again.”
She, like the families of other victims, felt that GM tried to trivialize this issue and has only shown remorse in light of the public backlash.
Barra has indicated that she is currently investigating a way to help the victims, but did not give specifics. GM does have the privilege of waiving its bankruptcy protection in order to allow the victims to sue, but there is no indication the company will do so. Some senators have interpreted GM’s hiring of Kenneth Feinberg, who helped manage the 9/11 Victim Compensation Fund, as a sign that GM may be seeking quick relief, while victims and their families have seen the move as a symbolic gesture.
“He’s not a bankruptcy expert,” Sen. Richard Blumenthal (D-Conn.) said about Feinberg. “Why not just come clean and say we’re going to do justice here? We’re going to do the right thing. We’re going to pay claims.”
“The more I see in the documents, the more convinced I am that GM has a real exposure to criminal liability,” Blumenthal continued.
The question of GM’s liability in this matter has yet to be answered. In testimony on Wednesday, David Friedman, acting chief of the National Highway Traffic Safety Administration, told the Senate panel that the GM airbag should have deployed, even with the ignition switched off, as the airbags should have capacitors to keep them powered in the event of a power loss.
With GM facing a second recall of vehicles for loss of power steering, and with both recalls overlapping with the Saturn Ion, the Chevrolet HHR and the Cobalt, GM — which previously saw 16 quarters of net profits — may be forced to atone for its past mistakes.