GM axes 15 over botched recall

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gmWARREN, Mich. — The delayed recall by General Motors that led to the deaths of at least 13 people was due to both the misconduct of about 20 employees, as well as “a pattern of incompetence and neglect” throughout the company, according to an internal probe of the recall released Thursday.

GM CEO Mary Barra announced that 15 employees have been dismissed from the company and five more have been disciplined in the wake of the three-month probe by former federal prosecutor Anton Valukas. Barra said some were dismissed due to misconduct or incompetence, while others simply did not do enough to fix the problem. The names and jobs of those dismissed were not disclosed.

Barra said that she was deeply saddened and disturbed reading Valukas’ report.

“It represents a fundamental failure to meet the basic needs of these customers,” she said about the findings of the report. “We simply didn’t do our jobs. We failed these customers,”

Barra’s said the report found that “GM personnel’s inability to address the ignition switch problem, which persisted for more than 11 years, represents a history of failures.”

“While everybody who was engaged on the ignition switch issue had the responsibility to fix it, nobody took responsibility,” she said. “Throughout the entire 11-year history, there was no demonstrated sense of urgency, right to the very end.”

Barra also said that the company would create a program to compensate those injured or killed by the defective cars, although she did not announce a dollar amount that would be dedicated to it. GM President Don Ammann said the company intends to fully compensate victims for their loss. The company will start accepting claims from the program August 1. Compensation expert Kenneth Feinberg is working on a formula to set the level of compensation for victims.

Barra said the report “revealed no conspiracy by the corporation to cover up the facts,” and that it found no evidence that “any employee made a trade-off between safety and cost,” it did not clear the company of wrongdoing.

“The problem is this case is more complicated and more nuanced,” she said. “What Valukas found was a pattern of management deficiencies and misjudgments — often based on incomplete data — that were passed off at the time as business as usual.”

GM admitted in February that its engineers first discovered the problem with the ignition switch as early as 2004, but it did not recall the 2.6 million cars affected until earlier this year. The faulty ignition switch made the cars prone to shutting off while on the road, disabling the airbags, power steering and anti-lock brakes.

GM estimates 13 people died as a result of the flawed ignition switch. But the head of the National Highway Traffic Safety Administration (NHTSA), other safety experts and families of people killed in recalled cars have said that number doesn’t include all the victims who should be counted.

The company faced two days of grueling Congressional hearings in April and agreed to a $35 million fine from safety regulators. It is the subject of a criminal probe. Congress and NHTSA are continuing their investigations, and the company faces wrongful death lawsuits from victims’ families.

Barra, who became CEO in January, has said she had to wait until Valukas’ probe was completed before she could answer many of the questions posed by lawmakers. She is due to brief lawmakers by phone on the results ahead of the report’s release.

The company, on Valukas’ advice, has already placed two engineers on paid leave in what Barra referred to as an “interim step.”

One of the engineers, who worked on the ignition switch, was accused by lawmakers of lying during a deposition in a wrongful death lawsuit. Barra conceded in response to questions that it appeared he was lying, but she said she wanted to wait for Valukas’ report.

Barra admitted in testimony before Congress that GM was wrong not to order the recall much earlier, and she has apologized repeatedly for the delay.

The recall has prompted a change in GM’s process for deciding when to order recalls and has prompted nearly 16 million recalls worldwide this year — a record for the company. GM has said it will cost about $1.7 billion to make the repairs on all those recalls.

GM tapped Valukas to lead its own investigation into the recall delays in March, and he vowed he would conduct a thorough and independent probe into the delays. A former U.S. Attorney, he is best known as the court-appointed investigator that looked into the causes of the Lehman Brothers bankruptcy.

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