McCaskill accuses GM chief of ‘culture of coverup’
04/02/2014 5:14 PM
04/02/2014 5:14 PM
Democratic Sen. Claire McCaskill of Missouri told General Motors’ chief executive Wednesday that the automaker operated for years in a “culture of coverup” that led a GM engineer to lie to conceal an ignition switch defect now blamed for at least 13 fatalities.
Presiding over a second day of congressional hearings into lethal failures of GM’s Chevrolet Cobalt and other models, McCaskill waved a company document that she said proves engineer Ray DeGiorgio perjured himself last year in a lawsuit filed by survivors of a Georgia nurse killed in a 2010 crash.
The newly disclosed document shows that despite his denials, DeGiorgio approved a new design for the ignition switch in 2006. The change apparently wasn’t reported to federal highway safety regulators, because the GM part number remained the same, an irregularity that Mary Barra, GM’s new CEO, called “unacceptable.”
Barra withstood a barrage of questions and accusations from McCaskill and other members of a Senate commerce subcommittee demanding to know how the automaker could have failed to fix the ignition switch for more than a decade. Problems with the defective part culminated in a series of recalls of more than 2.5 million cars since Feb. 7.
Some senators voiced skepticism about Barra’s candor in denying that she knew about the problem until Jan. 31 and in promising that the new GM, the one bailed out by taxpayers in 2009, “will do what’s right.”
Democratic Sen. Richard Blumenthal, a former Connecticut attorney general and U.S. attorney, called it “likely” that the company will face criminal prosecution.
Republican Sen. Kelly Ayotte of New Hampshire, a lawyer, said the failure to issue a new part number “is not a matter of acceptability. This is criminal deception.”
Besides parallel inquiries from both House and Senate subcommittees, GM faces an investigation by the National Highway Traffic Safety Administration. McCaskill, in a phone interview, said she also has been informed of a Justice Department inquiry.
During the hearing, questions arose about whether the company disclosed the defect to the Obama administration before the federal bailout in 2009, which left U.S. taxpayers with 60 percent of GM’s stock. The government sold off its shares before the recalls were announced.
Asked whether President Barack Obama is satisfied with the company’s response to the uproar besetting GM, White House spokesman Josh Earnest referred questions to the Department of Transportation. But he said that “it’s critical we get to the bottom of what happened here and what can be done to prevent similar tragedies in the future.”
Before the redesign, a slight bump or putting too many keys on a key ring could produce enough force to turn off the ignition, disabling power steering, power brakes and air bag deployment. Even with the change, GM has notified owners of the affected Chevrolet Cobalts and HHRs, Saturn Ions and Skys and Pontiac G5s and Solstices that driving over bumpy roads or sudden jarring still could trigger the problem.
McCaskill opened the hearing by tracing the discovery of the defect to litigation after the death of Brooke Melton, a 29-year-old pediatric nurse who was driving near Atlanta to celebrate her birthday with her boyfriend on March, 10, 2010, when her 2005 Cobalt suddenly lost power.
The car “hydroplaned, crossed the center line and slammed into another vehicle at a speed of 58 miles per hour,” McCaskill said. “Her car ended up in a creek. The airbags never deployed.”
Melton’s parents, Ken and Beth Melton, later hired attorney Lance Cooper to seek compensation from the company, leading to a two-year battle over internal company documents, McCaskill said. After an engineer assisting in the case discovered the ignition switch problem, DeGiorgio denied in sworn testimony knowing anything about it, McCaskill said.
Cooper did not see the document proving DeGiorgio’s alleged deception until after the suit was settled, McCaskill said.
“I, for the life of me, cannot understand why (DeGiorgio) still has his job,” McCaskill told Barra. “How do you justify withholding a key piece of documentary evidence in a litigation concerning a part that was changed, concerning a part number that wasn’t changed?”
Barra said she has been presented with data that appears to corroborate McCaskill’s allegation. However, she said, she would take no personnel actions against those responsible until completion of an internal investigation that she requested from Anton Valukas, a former U.S. attorney in Chicago.
McCaskill demanded to know whether the incriminating document has been made available to lawyers for other victims’ families.
To try to deflect the firestorm, Barra has taken a multi-pronged approach:
_ She sought the investigation by Valukas, promising him free rein to follow the facts.
_ Named a global executive to oversee safety.
_ Retained Kenneth Feinberg, an expert in distributing compensation to family members of victims of the Sept. 11, 2001, terror attacks and the Boston Marathon bombings.
_ Offered to provide free loaner cars for anyone who feels uncomfortable.
Following Wednesday’s hearing, however, McCaskill told McClatchy she believes “that what we know now is very egregious. We know that a defective part was changed out very quietly to evade the public knowing about it and frankly maybe evade other parts of GM knowing about it. Now we’ve got to figure out who was involved in that decision.”
But George Hoffer, a transportation economist at the University of Richmond who has consulted for GM and other major automakers, said he expects the recalls to have minimal effect, because two-thirds of the affected GM models have been discontinued. Recalling that GM recovered quickly from an uproar over its “side-saddle exploding pickup trucks” in the early 1990s because of exaggerated news reports, he said GM could rebound this time by blaming the ignition problem on “the old GM,” not the one emerging from bankruptcy.
Lesley Clark of the Washington Bureau contributed to this report.