Apologetic GM CEO is considering paying damages to victims - The Buffalo News

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Apologetic GM CEO is considering paying damages to victims

WASHINGTON – As families of crash victims lined the back of the House hearing room, displaying photos of their lost loved ones, Mary T. Barra, the chief executive of General Motors, told lawmakers Tuesday that the company was considering paying damages to victims of accidents in the millions of cars recalled for defective ignition switches.

To help decide, GM hired Kenneth Feinberg, a celebrated lawyer who handled payouts in the 9/11 victims fund and the Gulf oil spill, she told a House committee investigating the company’s failure to fix a faulty part that it knew about for more than a decade.

It was the first time that GM had acknowledged that it may pay damages in accident cases that occurred before the company filed for bankruptcy in 2009, even though – to the increasing outrage of victims’ families – the company is legally protected by agreements made in bankruptcy court.

“GM has civic and legal responsibilities, and we are thinking through exactly what those responsibilities are,” Barra said, though she stopped short of committing to such a fund, and, in one tense exchange, refused to say that the automaker was responsible for the crashes.

The compensation issue was one of many dramatic moments in the two hours of testimony by Barra, who took over as GM’s chief in January – just as an engineering panel was about to recommend a recall of defective Chevrolet Cobalts and other compact cars.

Speaking in measured tones and resting her hands on the table, Barra often condemned GM’s actions, calling them at times “unacceptable” and “disturbing.”

But she offered scant new information about the central reason for the hearing: How and why did GM repeatedly fail to fix faulty ignition switches on Cobalts and other compact cars, despite conducting multiple internal studies of the problem since 2001.

“I cannot tell you why it took years for a safety defect to be announced in that program, but I can tell you that we will find out,” she said. “I am deeply sorry.”

Consistently, she did not answer pointed questions, saying she did not know or noting that an internal investigation was underway. “I want to know the answer, too,” she often said.

Again and again, Barra deflected questions by telling members of the panel that she knew almost nothing about the problem until Jan. 31 and will await the results of an internal investigation being conducted by Anton Valukas, a former U.S. attorney from Chicago, before assigning blame.

Since February, GM has recalled 2.6 million Cobalts and other small cars because flawed ignition switches could suddenly cut off engine power and deactivate air bags. The company has linked 13 deaths to the faulty switch. Barra was followed by David Friedman, the acting administrator of the National Highway Traffic Safety Administration, which also has come under withering criticism for not detecting the defect despite mounting reports that something was wrong.

In his testimony, Friedman strongly criticized the automaker and vowed to “hold General Motors accountable” if the company failed to provide appropriate and timely information to regulators.

But ultimately, he said, regulators did not have enough conclusive evidence to order a recall.

Barra’s testimony came during a campaign seeking to reach out to the families of victims. On Monday night, she met with 22 relatives of accident victims, who had traveled to Washington for the hearings.

In announcing the hiring of Feinberg, Barra said that no decision had been made on restitution for accident victims and their families.

But the hiring of Feinberg – who has overseen victims’ funds in almost every prominent disaster in recent memory – was viewed by some legal experts as a shrewd public relations move.

“It has the benefit of making the company look responsible,” said Carl Tobias, a law professor at the University of Richmond, who specializes in product liability. But he cautioned that the establishment of a compensation fund may be impractical in this case.

“I wonder whether there’s time to do that type of effort just given where we are,” Tobias said. “As more information comes out I think there will be more and more potential plaintiffs, and their lawyers are litigating.”

During her testimony Tuesday, Barra was confronted by evidence that it knew about the ignition problem even before the first Cobalts and other affected vehicles went on sale a decade ago.

House investigators found that the switch’s supplier, Delphi, had pointed out to GM engineers that the switch did not meet the automaker’s own specifications.

GM and Delphi also quietly changed the switch in 2006 so that it required more force for drivers to turn the key, reducing the chance that it could be accidentally jostled and shut off engine power and air bags.

The House committee produced a document showing that the chief switch engineer at the time, Raymond DeGiorgio, approved the change in April 2006. DeGiorgio had denied making that decision during a deposition last year in a wrongful-death lawsuit involving a woman who died in a 2010 Cobalt crash in Georgia.

The committee also showed Barra documents that said GM did not change the switch earlier because of cost considerations.

In one document from 2005, a GM official estimated that the price of a new switch would cost the company 90 cents extra.

“If that was the reason the decision was made I find that unacceptable,” Barra said, criticizing what she termed GM’s “cost culture” in the past.

Lawmakers homed in on GM’s pattern of failure to address the ignition flaw, as well as the company’s unwillingness to inform consumers of the danger of driving defective vehicles. “We are in a situation, Ms. Barra, where we don’t trust the company right now,” said Rep. Gregg Harper, R-Miss.

At one point, Barra – a GM employee for more than 30 years and a high-ranking executive before becoming CEO – said she was unaware if the scope of the switch problems until a safety committee finally recommended a recall on Jan. 31. “I personally did not withhold any information,” Barra said during questioning.

That answer prompted a pointed response from Rep. Peter Welch, D-Vt., who challenged Barra to take full ownership of the issue.

“You are the company right now,” he said.

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