GM puts 2 engineers on paid leave in recall case
Friday, April 11, 2014
DETROIT (AP) — General Motors has suspended two engineers in the first disciplinary action stemming from its mishandled recall of more than 2 million small cars for a deadly ignition switch problem. But the company also said a second ignition part in the cars must be fixed, boosting first-quarter recall costs above $1 billion.
The suspensions, with pay, come from GM's own investigation into the recall. CEO Mary Barra promised Congress last week that she'd take action when appropriate, as lawmakers alleged that at least one company engineer tried to cover up the switch problem.
In a statement Thursday, Barra called the action an "interim step." Management and legal experts said paid leave is likely the first step in a process that could lead to firing or early retirement. But it also means that GM probably doesn't know yet if the engineers acted on their own or followed orders from a superior.
GM says at least 13 people have been killed in crashes linked to the defective switch, but family members of those who died say the death toll is much higher.
The company would not identify the suspended employees, but in congressional hearings last week, lawmakers produced memos singling out ignition switch engineer Ray DeGiorgio. Attempts to reach DeGiorgio were unsuccessful.
GM is recalling 2.6 million compact cars worldwide, mostly Chevrolet Cobalts and Saturn Ions, to replace the switches. On Thursday, it announced that dealers would also replace the ignition lock cylinders on the same cars because drivers can remove the key while the engine is still running. That could lead to a rollaway or crash. GM said it knows of one related injury.
In the past two months, GM has announced recalls covering a total of 6.3 million vehicles for a number of issues. The estimated cost has now grown to $1.3 billion from $300 million initially.
In addition to Congress, the Justice Department and the National Highway Traffic Safety Administration are investigating GM's slow response to the ignition problem.
Sen. Claire McCaskill, D-Mo., last week accused DeGiorgio of trying to cover up the switch problem. DeGiorgio said in a deposition last year for a lawsuit against GM that he never approved a change to the ignition switch. McCaskill produced a document from 2006 showing he signed off on a replacement, but with the same part number. Failing to change a part number makes the part harder to track.
Lawmakers were also critical of a decision made within GM's engineering ranks to not fix the switch because it would be too costly and time-consuming.
During the hearing, Barra called the failure to change the part number "unacceptable." She also said if inappropriate decisions were made, GM would take action, including firing those involved.
Experts say the paid suspensions likely follow GM's process for getting rid of employees while protecting the company from unknowns that may come out in GM's internal investigation being led by former U.S. Attorney Anton Valukas.
"They have to be careful at this point not to over-react, despite all the pressure that's being put on them certainly by Congress, public pressure," said Peter Henning, a law professor at Wayne State University in Detroit and a former federal prosecutor. "I've got to believe they have an HR (human resources) binder that would sink a battleship. Step one is usually paid leave," he said.
But others said there's public relations value in taking action against employees. "They need to have a charm offensive, right?" said Carl Tobias, a professor at the University of Richmond Law School who specializes in product liability. "Anything they can do to make themselves look like they're more vigorous or rigorous on safety."
Henning said any criminal charges are a long way off. In large organizations like GM, groups make decisions rather than individuals, as problems are bumped up the organizational chart, he said.
"It's hard to be able to say 'this is the person who made this decision,' and him or her alone," Henning said.
Also Thursday, GM announced a program to recognize employees who speak up when they see something that could affect customer safety. "GM employees should raise safety concerns quickly and forcefully, and be recognized for doing so," said Barra, who has promised a transformation to a safety-first corporate culture.
The ignition switches can unexpectedly slip out of the "run" position to "accessory" or "off." That shuts off the engine and the power-assisted steering and brakes and can cause drivers to lose control of their cars. It also disables the air bags. In many of the crashes, drivers have inexplicably veered off the road or into traffic.
Parts to begin fixing the cars are to start arriving at dealerships on Friday. But Barra has said it likely will take until October before all the cars are repaired.
The latest issue with the ignition switches comes as GM fights a motion in a Texas federal court that would force it to tell the cars' owners to stop driving them until they are repaired. GM says the cars are safe as long as objects are removed from the key chain. Plaintiffs claim that fix is insufficient. A judge is expected to rule this week.
Shares of GM closed Thursday down 32 cents, or just under 1 percent, at $33.30.
Marcy Gordon contributed from Washington.
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