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Thursday, Jun 5, 2014

Business

GM recall probe finds no cover-up, clears top executives

Reuters | Thursday, Jun 5, 2014

WARREN Mich. - General Motors Co (GM.N: Quote, Profile, Research, Stock Buzz) has found senior executives were not to blame for a delayed vehicle recall involving defective ignition switches linked to at least 13 deaths, a person familiar with the matter told Reuters on Thursday.

The report by the automaker on its internal probe also concludes that there was no concerted cover-up of the faulty parts and instead points to cultural failings at the company, according to the source, who is familiar with the contents of the report.

The findings, first reported by the Wall Street Journal, are expected to be made public later on Thursday. Staff cuts are also expected, although they are likely to spare senior executives.

GM spokesman Jim Cain declined to comment about the report ahead of its release by the company.

The source confirmed that the report concluded Chief Executive Officer Mary Barra, executives who reported directly to her, the board of directors and former CEO Dan Akerson did not know about the defective switches before December.

It also found that GM's general counsel, Michael Millikin, was not responsible for the mishandling of defects and the recall delay, the source said. Millikin, who led the internal probe with former US prosecutor Anton Valukas, is expected to continue working at GM.

The move to spare top executives from blame drew some sharp criticism.

"How do you truly fix a culture of carelessness and cover-up without cutting the head off the snake?" said Robert Hilliard, a lawyer for a plaintiff in a lawsuit against GM related to the ignition switch defect.

GM on Thursday is expected to announce that some employees will be dismissed, including switch designer Raymond DeGiorgio, according to the source, who requested anonymity because the report is not yet public.

Attempts to reach DeGiorgio were unsuccessful. His home phone has been disconnected, and he did not answer calls to his mobile phone. An email to DeGiorgio from Reuters was returned as undeliverable.

The report is also likely to call for the creation of a new operational risk-management committee to closely monitor how top executives handle potential risks, the source confirmed.

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