Tag Archive | "ignition switch"

GM Judges Hear Claims of 60 Deaths as Defect Suit Merger Mulled

A panel of federal judges heard arguments on where to merge 90 ignition defect suits against General Motors Co., with New York and California courts as the lead contenders, as lawyers for car owners claimed to know of many more related deaths than the 13 acknowledged by the automaker, reported The Detroit News.

Corpus Christi, Texas lawyer Rudy Gonzales claimed to know of at least 60 deaths related to the defect, without providing the seven-member panel any evidence. The defect causes ignition switches in some cars to shut off while the vehicles are being driven, disabling power steering and preventing airbags from deploying upon impact.

The judges will decide where claims for economic losses associated with some of the 2.59 million recalled cars will initially be heard.

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Ex-GM CEO Akerson: Barra ‘Unaware’ of Ignition Switch Problem

Via The Detroit News:

Former General Motors Co. CEO Dan Akerson says he believes his successor Mary Barra was unaware of the ignition switch problems that led to the eventual recall of 2.6 million vehicles linked to 13 deaths and 47 crashes.

In an interview with Forbes, Akerson — breaking his silence on the issue — said the board didn’t throw Barra under the bus by giving her the job and knowing of a looming crisis.

“Mary has said it: The moment she became aware of the problem, as I would expect, she confronted it. She didn’t know about it. I bet my life on it,” Akerson told the magazine in a story that was posted Wednesday morning.

GM has turned over hundreds of thousands of pages of records to Congress, and no emails or other records have emerged to suggest Barra knew about the issue in her prior jobs in product development and in other positions.

GM’s board met in Washington in December to pick a successor after Akerson told the board he needed to leave ahead of schedule because his wife had been diagnosed with cancer. Barra took over as CEO on Jan. 15, about a month before the first ignition switch recall.

Former senior executives at GM have previously told The Detroit News that top management was unaware of the issue. The Justice Department, Securities and Exchange Commission, a group of attorneys general and two congressional committees are investigating.

GM plans to issue its internal report from a former U.S. attorney in Chicago as early as next week into what went wrong, planning to provide a detailed chronology of the events that led to GM’s eventual recall of 2.6 million vehicles. GM also is expected soon to have a report from compensation expert Kenneth Feinberg. GM hired Feinberg to help the automaker look at options and determine if it will compensate victims related to the ignition switch defect — and if so, how much it will pay them.

This month, GM paid a record-setting $35 million fine and agreed to up to three years of enhanced oversight by the National Highway Traffic Safety Administration over its delayed recall.

GM Chairman Tim Solso also told the magazine that the board has confidence in Barra.

“The confidence has grown over a period of time, given the way that Mary has handled all the situations: testifying before Congress, meeting with the media,” Solso said. “She’s done a superb job, and the board recognizes that.”

Barra, in a rare interview since the GM recall crisis hit, also tells Forbes about listening to the stories of families who lost loved ones in crashes they believe are tied to the faulty ignition switches and she thinks the crisis will help the automaker change its ways.

“I really feel — obviously we want to do the right thing and serve the customer well through this — but it’s also an opportunity to accelerate cultural change,” she said.

More changes are expected once GM releases its internal report. The automaker already has made numerous changes to its safety engineering operations, as a few top engineering executives have retired from the company and Barra placed two engineers on paid leave. GM has restructured its vehicle engineering department and has moved several employees into new jobs in its safety engineering division.

Former Obama administration auto adviser Harry Wilson said last week the crisis “sadly is emblematic of the cultural problems.”

“They would do anything to save a penny, including some really bad decisions, both economically and morally. That was a part of the culture that was driven by a company that was living on the brink of disaster for many years prior to 2009,” Wilson said.

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‘Upset’ G.M. Engineer Spoke in House Inquiry

Via The New York Times:

An engineer at General Motors who is at the center of accusations that the company covered up a deadly defect appeared distraught during lengthy questioning by congressional investigators, according to people familiar with the session.

The engineer, Raymond DeGiorgio, who was suspended last month with pay, has not spoken publicly since G.M. acknowledged the ignition switch defect in February and began recalling millions of Chevrolet Cobalts, Saturn Ions and other models. The automaker has linked the defect to 13 deaths, a number that federal regulators said was expected to grow.

A House staff aide said that Mr. DeGiorgio, 61, appeared “genuinely upset” about the deaths and about his inability to connect the ignition switch problem with the failure of air bags to deploy.

The defective switch could cause engines to shut down, disabling electrical systems and things like power steering, power brakes and air bags. Mr. DeGiorgio, who has worked at G.M. since 1991, was a lead design engineer for ignition switches for a variety of models.

“He came across as if he was just overburdened and just missed it,” said the staff member, who was not authorized to speak publicly about the investigation. Mr. DeGiorgio’s comments, during 10 hours of questioning on May 19, offer a glimpse into how the switch was secretly changed eight years ago, but no recall was issued for vehicles equipped with the defective switches until this February.

Mr. DeGiorgio did not give any information that indicated that the new chief executive of G.M., Mary T. Barra, knew anything about the problem before she took her job early this year. He did not seek to implicate any of his superiors, the people familiar with the questioning said.

Mr. DeGiorgio was asked about statements he made during a deposition last year in a wrongful-death lawsuit brought against G.M. Mr. DeGiorgio told the congressional investigators that when giving that deposition, he had forgotten his decision to order a major upgrade in the switch, according to the people familiar with the session.

Mr. DeGiorgio signed off on changes in the ignition switch in April 2006, authorizing a supplier, Delphi, to make improvements to the switch at its manufacturing plant in Mexico. But he denied it in the deposition last year in the lawsuit, which was brought by the family of a Georgia woman who died in a 2005 Chevrolet Cobalt.

“I don’t ever recall authorizing such a change,” he said in a sworn deposition in April 2013.

Under questioning by the House investigators, Mr. DeGiorgio said he had forgotten about the fix — which involved a stronger spring in the mechanism that determines how much force is needed to turn the key — because it was one of a package of changes, and because it was seven years before the deposition, according to the people familiar with the questioning.

Mr. DeGiorgio was not sworn in, but speaking untruthfully in such settings can carry substantial legal penalties, according to experts.

The change he approved covered two items, the spring and a printed circuit board, known as a P.C.B., that was causing some Saturn Ion models not to start, according to one person involved in the case.

“He definitely said he was more focused on electrical problems” said the staff member, who described Mr. DeGiorgio as “very emotional at times.”

Mr. DeGiorgio’s actions might not have come to light without an independent investigation by a Florida engineer, Mark Hood, who was retained by the family of the Georgia woman, Brooke Melton.

Mr. Hood discovered that switches in Cobalts made after 2006 were significantly stronger than ones found in pre-2006 cars.

He was pressed on that point by Lance Cooper, the lawyer for the Melton family during the deposition last year.

“So if any such change is made, it was made without your knowledge and authorization?” Mr. Cooper asked.

“That is correct,” Mr. DeGiorgio said.

The Meltons have asked that their case against G.M. be reopened on the grounds that Mr. DeGiorgio possibly committed perjury, because it appeared that he gave a false answer in the deposition last year.

Ms. Barra, the chief executive, acknowledged under questioning by lawmakers on April 2 that Mr. DeGiorgio might have lied during his deposition.

“You know he lied under oath,” said Senator Claire McCaskill, Democrat of Missouri.

“The data that’s been put in front of me indicates that, but I’m waiting for the full investigation,” Ms. Barra said.

Eight days later, on April 10, Mr. DeGiorgio was suspended with pay by G.M. along with his supervisor, Gary Altman. House investigators have also interviewed Mr. Altman. Mr. DeGiorgio has not returned telephone calls to his home in a rural suburb of Detroit.

Interviews by House investigators are often a preliminary step to calling witnesses for a public hearing, although the House committee undertaking the investigation, Energy and Commerce, has not scheduled a hearing.

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GM Legal Department Under Scrutiny in Company’s Recall Probe

Via Reuters:

General Motors’ legal department is the focus of an internal inquiry into how the company handled a vehicle safety defect linked to 13 deaths, the New York Times reported, citing two people with knowledge of the inquiry.

The U.S. government hit the automaker with a $35 million fine on Friday for its delayed response to an ignition switch defect in millions of vehicles. Regulators accused company officials of concealing the problem.

The largest U.S. automaker originally noticed the defect more than a decade ago but issued the first recalls only in February of this year despite years of consumer complaints.

In an article published on Saturday, the Times said a review of internal documents, emails and interviews showed that high-ranking officials “particularly in GM’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.”

The newspaper said a number of GM departments stepped up efforts to fix the switches when depositions threatened to ensnare senior officials, and company lawyers moved to keep its actions secret from families of crash victims and others.

GM faces other federal investigations into its handling of the recall, which could produce more severe punishments. The $35 million fine was the maximum the U.S. Transportation Department could impose.

U.S. Transportation Secretary Anthony Foxx said GM had broken the law and failed to meet its obligations to public safety.

GM’s internal investigation is expected to be completed within the next two weeks. The U.S. Congress, Department of Justice, Securities and Exchange Commission and several states are also conducting investigations.

The Times said GM had declined to make Millikin or other executives available for interviews for its story. It said four senior executives have resigned or left the company since the recall began, including Jim Federico, a top engineer who avoided being deposed in a lawsuit last year when GM settled a case tied to a defective ignition switch.

The newspaper said GM lawyers unexpectedly approved the settlement last September in a lawsuit filed by the family of a Georgia woman who died in a Cobalt crash in 2010.

Documents indicate GM restarted its internal investigation because of information uncovered in the Georgia case, the Times said.

The faulty ignition switches on Chevrolet Cobalts, Saturn Ions and other GM vehicles can cause their engines to stall, which in turn prevents air bags from deploying during crashes. As well, power steering and power brakes do not operate when the ignition switch unexpectedly moves from the “on” position to “accessory.”

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GM Employees, But Not CEO Barra, Knew About Switch Problem: NHTSA

Via Reuters

The National Highway Traffic Safety Administration’s top official on Friday said there was no information that General Motors Co’s Chief Executive Mary Barra knew about faulty ignition switches in some of the company’s vehicles.

But other GM employees, from engineers to executives, were aware of the problem, acting administrator David Friedman told reporters at a news conference after U.S. transportation officials announced a $35 million penalty against the automaker.

“Their process was broken,” Friedman said, adding that the company’s recall problems were due to several factors.

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GM to Pay $35 Million Over Handling of Ignition-Switch Defect

Via The Wall Street Journal

General Motors Co. agreed to pay a $35 million fine to settle a U.S. auto-safety investigation that found GM had schemed to keep secret its information on faulty ignition switches installed on 2.6 million vehicles.

U.S. regulators for the first time disclosed details of the probe, including revealing that the Detroit company had coached workers against using “defect” and “Corvair-like” in communications. They also said the nation’s largest auto maker had information that should have allowed it in 2009 to link the defective switches to air bags not inflating during crashes.

The auto maker’s “decision making, structure and process stood in the way” of communicating safety problems, said David Friedman, acting administrator of auto-safety regulator National Highway Traffic Safety Administration. GM’s employee training even “discouraged workers from using terms like defect, dangerous and safety related,” he added.

GM admitted to the actions but said it has taken steps to improve its safety policies since the February recalls. “We encourage employees to be factual in their statements and will continue to work with NHTSA to improve our safety processes,” a spokesman said.

The fine is the maximum allowed for violations of U.S. law requiring car makers to report safety defects within five days of their discovery. Regulators described a process that stymied attempts to learn early on about defective switches and their role in U.S. crashes that led to at least 13 deaths.

Bob Hilliard, a Texas attorney representing families suing GM over fatal crashes, called Friday’s agreement “a complete victory for GM,” and criticized the U.S. auto-safety regulator as a “toothless tiger.”

“This $35 million agreement is pennies in a fountain,” he said.

As part of the settlement, GM agreed to make “significant and wide-ranging internal changes to its review of safety-related issues in the United States,” the Transportation Department said. GM’s top vehicle-safety executives will meet quarterly with NHTSA officials to review its compliance with the deal, which will stay in effect for three years. Last month, the company created a “global product integrity” unit designed to improve safety oversight and encouraged employees to report any safety problems they uncover.

The settlement marks one step in GM’s efforts to put the recall controversy behind it. The auto maker still faces a criminal investigation by the U.S. Justice Department and probes by state attorneys general and the Securities and Exchange Commission are continuing. It also faces dozens of suits by attorneys representing crash victims, vehicle owners and shareholders.

In court filings, the auto maker has denied fraudulently concealing information and has fought plaintiff-lawyer efforts to reopen its bankruptcy case. As part of its 2009 bankruptcy, the company was relieved of liabilities for injuries before its July bankruptcy-court petition. It also has said it is providing information to U.S. investigators pursuing a criminal probe.

“We have learned a great deal from this recall. We will now focus on the goal of becoming an industry leader in safety,” GM Chief Executive Mary Barra said in a statement on Friday. “We will emerge from this situation a stronger company.”

GM agreed to adhere to produce enough replacement switches by Oct. 4 to repair all the affected vehicles. GM said it expects to meet the production deadline.

Since the first ignition-switch recall in February, GM has ordered a series of safety recalls affecting nearly 13 million vehicles. It has taken charges to earnings totaling $1.5 billion to cover the costs of the repair campaigns.

The agreement “puts all manufacturers on notice that they will be held accountable if they fail to quickly report and address safety-related defects,” Transportation Secretary Anthony Foxx said at a news conference in Washington, D.C.

Mr. Foxx reiterated his support for legislation to increase maximum penalties for delaying recalls to $300 million from $35 million. The Transportation Department separately is fining GM $7,000 a day for failing to meet an April 3 deadline to explain why GM delayed recalling vehicles to fix the ignition problems. The company has yet to complete that request.

Mr. Foxx and NHTSA have come under fire from members of Congress for not taking tougher steps years ago to force GM to recall the vehicles with the defective switches, despite hundreds of consumer complaints and evidence from crash investigations that pointed to the defective switch as a possible cause of air-bag failures.

Sen. Richard Blumenthal (D., Conn.) called the penalty a “mockery of justice” and urged Congress to lift the current $35 million cap on civil penalties. Mr. Blumenthal also urged legislators to bring legislation to prevent auto makers from winning court approval of sealed agreements in injury cases.

The auto maker discovered as far back as 2001 that the design of ignition switches used in Chevrolet Cobalt, Saturn Ion and other compact cars built in the mid-2000s could slip out of the run position while being driven, cutting power to steering, brake assist and air bags. But the auto maker didn’t start recalling vehicles equipped with the suspect switches until early this year.

“Employees of General Motors, from engineers and investigators all the way up through executives were aware of information and were briefed on information associated with this recall,” said Acting Administrator Friedman. “That is exactly why we entered into this consent decree and held them accountable for failing to act on a variety of levels.”

The agreement included slides from an internal training program that encouraged workers to avoid phrases including “Corvair-like” and “rolling sarcophagus.” The Corvair became a symbol of accident-prone vehicles in the 1960s after its mention in Ralph Nader’s “Unsafe at Any Speed.”

Mr. Friedman said the probe didn’t show that Ms. Barra, earlier head of global product development, had early knowledge of the switch problems.

GM hasn’t fired anyone over the ignition-switch recall matter. Two engineers involved with the design of the switch have been placed on paid leave. Two executives who oversaw inconclusive investigations of the problem before 2014 have recently retired, but the company says those decisions weren’t connected to the recall. GM has said it would take “appropriate action” once its internal investigation is done. That probe is expected to be delivered before GM’s annual meeting on June 10. NHTSA officials called the internal probe irrelevant to their investigation.

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