U.S. Senators probing GM raise prospect of criminal wrongdoing

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A U.S. Senate panel raised the prospect of criminal prosecution and promised more hearings over General Motors' failure to fix a defective ignition switch, as GM CEO Mary Barra withstood intense questioning from lawmakers frustrated by a lack of answers.

Members of the Senate Commerce Committee's consumer protection panel said future hearings will likely seek to question former GM officials who were in charge during the years that the faulty ignition switch -- now tied to 13 deaths -- was left in 2.6 million mid-2000s cars without a recall until February.

“I think we need to hear from people who had the key positions at GM who perhaps had knowledge of this,” Senator Dan Coats, a Republican from Indiana, said.

Facing a sharply harsher tone than during her testimony before a House panel a day earlier, Barra remained composed while vowing to return to Capitol Hill with answers once GM's investigation is done. But panel members vented frustration over the CEO’s inability to answer even questions related to documents that GM itself turned over to lawmakers.

At one point during the 100-minute hearing, Senator Barbara Boxer, a Democrat from Calififornia, snapped at Barra in frustration: “You don't know anything about anything!”

‘He lied’

Earlier in the hearing, Senator Claire McCaskill, a Missouri Democrat and chairwoman of the subcommittee, accused a GM engineer of lying about his role in the 2006 redesign of the flawed ignition switch, and said GM “chose to conceal, rather than disclose” the safety defect for more than seven years.

She cited an April 2006 document, released Tuesday by House lawmakers, showing that GM engineer Ray DeGiorgio authorized the redesign of the switch that’s now at the center of the recall. GM has told regulators that the redesigned part was never assigned a new part number, a violation of company protocols that complicated engineers’ efforts to figure out why the switches in later-model cars were different.

DeGiorgio, in an April 2013 deposition, told a lawyer representing the family of a Georgia woman who was killed when her 2005 Cobalt crashed that he didn’t approve any changes to the ignition switch in 2006. “I was not aware of a detent plunger switch change. We certainly did not approve a detent plunger design change,” DeGiorgio said in the deposition obtained by Automotive News Europe sister publication Automotive News.

“He lied,” McCaskill said at the hearing, without naming DeGiorgio.

When McCaskill later repeated that charge, the CEO responded, “The data that’s been put in front of me indicates that,” but she said she is awaiting the end of the company’s investigation.

Still an employee

In her testimony before a House committee on Tuesday, Barra told lawmakers that DeGiorgio is still a GM employee but said she didn’t know who was responsible for the decision to authorize the redesign without a new part number being assigned.

McCaskill sternly questioned Barra about why GM’s top executives wouldn’t have been briefed on the findings from the DeGiorgio deposition in April 2013, more than nine months before GM announced a recall.

Barra has said that she didn’t find out about a problem with the Cobalt until last December, days after she was appointed CEO. She assumed the post on Jan. 15.

Barra said the lawyer retained by GM who sat in on that deposition would have reported to “part of the senior legal team,” but said she didn't know why the information wouldn’t have been relayed to top executives.

“That is part of the investigation,” Barra told McCaskill, referring to an internal GM investigation being led by Chicago attorney Anton Valukas.

Deflected questions

Much as she did in her appearance before a House panel Tuesday, Barra deflected most of the specific questions about GM’s failure to act sooner. She said GM’s investigation would yield the answers that lawmakers, regulators and GM leaders are seeking.

Lawmakers and regulators want to know why it took GM so long to recall 2.6 million compact Chevrolet, Pontiac and Saturn cars for the faulty ignition switch, even though engineers first discovered a potential defect in 2001 and returned to the issue time and again before GM announced a recall in February of this year.

A lack of sufficient torque in the ignition switch can cause it to slip back from the “on” position to the “accessory” or “off” mode, cutting power to the power steering and brakes and disabling the airbags.

Sen. Kelly Ayotte, R-N.H., told Barra that she believes GM’s failure to assign a new identifying number when it redesigned the faulty part represents “criminal deception.”

Ayotte, an attorney, said she thinks it is “shocking” that details of DeGiorgio’s deposition wouldn't have reached GM’s top leaders.

“This would have been shocking for me to hear in a deposition representing a client,” Ayotte said. “I would have gone to the top.”

Barra repeated her testimony from Tuesday’s House hearing that changing a part design without a new number would be a violation of GM policy and run counter to “engineering 101.”

“It is not an appropriate practice to do,” Barra said.

Sen. Claire McCaskill, D-Mo., sternly questioned GM CEO Mary Barra today about why GM's top executives wouldn't have been briefed on the findings from an engineer's key deposition in April 2013, more than nine months before GM announced a recall, in February 2014.

Photo credit: BLOOMBERG

Reason for concern

In testimony given after Barra’s appearance, the head of the National Highway Traffic Safety Administration drew a parallel between GM’s actions and Toyota Motor Corp.’s decision in 2009 to fix flawed accelerator pedals without ordering a recall.

The manufacturing change that Toyota quietly ordered to prevent the pedals from sticking was cited by the Justice Department as prime evidence that the automaker broke the law. Toyota last month agreed to pay a $1.2 billion penalty for covering up the defect.

Asked if he feels GM concealed evidence, David Friedman, NHTSA’s acting administrator since January, said that he didn’t know for sure but that the manner in which GM redesigned the ignition switch in 2006 — without a corresponding change in the part number — is “one of the reasons why I’m concerned in this case.”

Calvin Scovel, the Transportation Department’s inspector general, declined to confirm whether Justice Department investigators are looking into GM, but he said the prosecution of Toyota, which his office was a part of, helped those investigators gain considerable expertise in such matters.

Friedman said NHTSA is seeking details on 98 legal claims against GM related to the ignition defect. Under questioning, he said the agency can issue subpoenas to learn more about such cases but cannot access sealed information about confidential settlements GM reached with crash victims and their families.

The agency is still trying to figure out why the ignition switch in the recalled cars can cause airbags to fail in a crash, Friedman testified. The correlation “doesn’t make sense to me,” he said, because airbags are supposed to be designed to work even when the power is cut off, which frequently happens upon impact.

“If a vehicle is moving, the airbag algorithm should make those airbags deploy,” Friedman said. “Is it truly a power issue or something embedded in their algorithm that shouldn’t have been there?”

You can reach Mike Colias at mcolias@crain.com.

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