General Motors Company (GM) admits incompetence and negligence

Posted Jun 5, 2014

General Motors Company (NYSE:GM) CEO Mary Barra said that 15 employees have been fired and 5 others have been disciplined due to the company’s failure to disclose an ignition switch defect that is connected to at least 13 deaths.

GM will also form a compensation program for families of victims and for people that have suffered injuries in accidents related to the switches. This program is expected to launch on August 1st. Barra made the announcement today after releasing an internal investigation into the recall of 2.6 million vehicles. She did not name the employees that were dismissed.

Barra said that the investigation was “brutally tough” and “deeply troubling.” GM did not disclose the issue for over a decade.

Barra said that attorney Anton Valukas interviewed 230 employees and reviewed around 41 million documents to produce the report, which makes recommendations to avoid future safety problems.

The recall started in February when GM announced it was recalling 780,000 older vehicldes, including Chevrolet Cobalts, Pontiac G5s, and Saturn Ions. This number jumped to 2.6 million cars across the world.

General Motors paid a $35 million penalty last month, which is the largest ever fine assessed by the National Highway Traffic Safety Administration due to the failure to report the problem quickly to federal regulators. General Motors knew about the problems with the ignition switches as early as 2001.

In 2005, GM told dealers to tell owners to take excess items off of their key chains so it would not drag down the ignition switch. One year later, a engineer at GM approved a change in the switch design, but did not inform the government or change the corresponding part number. This made it harder for other GM engineers to find out why older Cobalts performed worse than new ones. Last month, GM recalled another 2.7 million vehicles.