General Motors, citing what the CEO called a pattern of “misconduct or incompetence,” sacked 15 employees and disciplined a handful of others Thursday because of faulty ignition switches blamed for the deaths of at least 13 people.
CEO Mary Barra told employees at a town hall meeting that an internal report had found incompetence and neglect, but not a cover-up. The automaker took more than a decade to recall as many as 2.6 million cars with bad ignitions that caused some cars to suddenly stall on the road.
“We simply didn’t do our job,” Barra said. “We failed these customers, and we must face up to it, and we must learn from it.”
Of the victims, she said: “I realize there are no words of mine that can ease their grief or their pain.” The company has blamed the defect for 47 crashes.
Barra said the dismissals reached the highest levels of the company. Most were in senior or executive roles, she told reporters.
The company also announced the creation of a compensation fund for victims and their families. It will be overseen by Kenneth Feinberg, who administered payments to the families of victims of the Sept. 11 attacks and the Boston Marathon bombings. GM did not say how big the fund would be.
When the faulty switches were weighed down by keys, the ignition could slip out of the on position while the car was on the road, causing the engine to stall, the driver to lose control of power steering and brakes and the airbags to fail to deploy.
In February, GM recalled 780,000 Chevrolet Cobalts and Pontiac G5s because of defective ignition switches. It quickly added the Saturn Ion and other small cars to the list.
GM dealerships began repairing the cars in April. By Thursday, 86,000 had been repaired. GM expects the repairs, which depend on drivers responding to the recall and bringing their cars in, to take until October.
The company paid a $35 million fine last month, the largest civil penalty ever leveled by federal car safety regulators, for failing to report the problem quickly.
GM knew about the problems as early as 2001. Four years later, it suggested that dealers tell car owners to take excess weight off their key chains. On its website today, GM suggests that drivers remove everything from their key ring except the car key, including the key fob.
GM President Dan Ammann said the company stood by 13 as the total number of deaths attributed to the faulty ignitions “based on all the information we have right now.” But he left the door open for finding more, saying that GM would “reach out and find all the people” affected and that Feinberg would determine who is eligible for payment.
Barra said that the report found no conspiracy by the corporation to cover up facts. Rather, she said, a “pattern of management deficiencies and misjudgments, often based on incomplete data,” was overlooked as business as usual.
The 15 included some who were removed because of “misconduct or incompetence” or who “acted inappropriately” and others who didn't act with a sense of urgency. Five more employees were disciplined, Barra said.
Among those fired were Ray DeGiorgio, the lead design engineer for the Chevrolet Cobalt ignition switch. He had previously been placed on leave. Michael P. Millikin, the general counsel, was not fired. Some reports had speculated that he was at risk.
The report, paid for by GM, was compiled by former federal prosecutor Anton Valukas, who was hired by the company to get to the bottom of the delay. Congress, regulators and a slew of lawyers hired by victims and their families are also looking into it.
Valukas reviewed 41 million documents and interviewed 230 employees to prepare the report, which Barra said had been shared with “appropriate government officials.”
Rep. Fred Upton, R-Mich., the chairman of the House Energy and Commerce Committee, said that he planned to hold a hearing on the findings of the GM report, and that Barra would be among those called to testify.
Barra told employees to expect further recalls. Over the past few months, GM has aggressively recalled cars. To date, more than 15 million vehicles worldwide have been recalled because of a slew of flaws.
Prior to the release of the report, some GM critics were skeptical that the investigation would offer answers.
“As of right now I don’t trust GM,” said Jayne Rimer, whose daughter, Natasha Weigel, was one of two teenagers killed in 2006 when their Cobalt crashed in Wisconsin. “I hope this internal investigation produces the answers the families are searching for. We deserve to hear what’s gone on in their company — the truth.”
The crisis over the ignition switch recall doesn't seem to have harmed GM’s sales. GM posted a 12.6 percent increase in sales last month, its best showing since August 2008, when the automaker began its descent into bankruptcy.
Last month, GM said that it plans to take a $400 million accounting charge in the second quarter to cover costs associated with the recalls and the repairs. Barra said the charge should be complete by the end of the quarter but declined to comment further.
GM took a $1.3 billion charge in the first quarter because of the recalls and repairs. GM’s stock price is basically unchanged since February.
The Associated Press contributed to this report.
First published June 5 2014, 5:43 AM