June 4, 2014 at 11:05 pm

GM to announce exits of several executives, release recall probe results

Gary Pittam replaces the ignition switch on a Cobalt at Al Serra Chevrolet in Grand Blanc. )

General Motors Co. will announce the departure of several ranking executives Thursday, as it releases an investigation into why the automaker failed for years to recall 2.6 million cars linked to at least 13 deaths and 47 crashes, according to four people briefed on the matter.

It was unclear Wednesday how many executives, lawyers and engineers are leaving GM or how many have been fired in connection with the investigation. Three people briefed on the matter said GM is expected to disclose the number of company officials who are leaving, but not name them. The departing official, including at least one vice president and a senior lawyer, are expected to come from several parts of the company including engineering, legal and public policy.

GM spokesman Greg Martin declined to comment Wednesday on whether any officials have been fired, or how many officials are leaving. GM previously put two GM engineers on paid leave in connection with the internal investigation in early April.

The investigation led by Anton Valukas, a former U.S. attorney from Chicago who is chairman of the law firm Jenner & Block, has spanned millions of pages of documents and dozens of interviews and will offer a critical look at the missteps the Detroit automaker made after getting the first report of an ignition switch problem in 2001 in a preproduction Saturn Ion.

The report will be painful, officials who have read it say, and will dredge up GM’s corporate-culture failings and other problems over the past decade. It is expected to provide a detailed chronology of what went wrong.

GM said CEO Mary Barra will update employees on the investigation Thursday during a town hall meeting at GM’s Tech Center in Warren, followed by a news conference. She will hold a conference call with Wall Street analysts later in the day.

The automaker will not announce a victims compensation fund. GM adviser Ken Feinberg said Tuesday he still needs “weeks” to complete his work.

Several GM safety officials have retired, left the company or moved to other positions as the recall crisis has unfolded. GM has named a new vice president overseeing safety issues and more than doubled the number of engineers looking at safety issues. GM has recalled a record 15.8 million vehicles worldwide in 30 campaigns this year — about 20 times as many vehicles as it recalled last year.

The U.S. Attorney’s Office in New York, aided by a federal grand jury, is investigating GM’s conduct, as is the Securities and Exchange Commission, a group of state attorneys general and two congressional committees that are planning another round of hearings with Barra. She has vowed to answer questions that she repeatedly avoided during her first appearance.

Barra’s challenge is to emphasize the company has made dramatic changes, shaken up its culture and organization, and made significant changes, analysts said.

Kelley Blue Book senior analyst Karl Brauer said GM’s report needs to answer critical questions such as why it took so long, who knew about it and who didn’t. The report also needs to lay the blame at someone’s feet, Brauer said.

“The report needs to come off as genuine, not as a GM-sponsored version of what happened, but what really happened,” he said.

GM will turn over its written report to the National Highway Traffic Safety Administration by early today. The agency is expected to make it public later in the day.

No evidence has emerged that senior executives — including Barra — had any knowledge of the ignition defects until shortly before the company decided to recall the vehicles in February.

Former GM CEO Dan Akerson told Forbes magazine that neither he nor Barra had any knowledge of the recall problem until just before GM ordered a recall in early February.

Last month, GM paid a record-setting $35 million civil penalty to NHTSA and admitted it violated the law by failing to recall older Cobalts, Ions and other cars in a timely fashion. The automaker agreed to make significant safety changes and hold regular meetings with NHTSA for up to three years of enhanced oversight.

Transportation officials said GM knew ignition switch problems would turn off air bags in affected Chevrolet Cobalts as early as November 2009. A heavy keychain can turn off the switch in an accident or if it’s bumped, killing the engine and disabling power steering and air bags. NHTSA Acting Administrator David Friedman said he had no records indicating Barra knew of the defect, but said that GM engineers, investigators, lawyers and other executives knew of it and failed to act to protect consumers.

Some legal experts have criticized GM’s hiring of Valukas about three months ago, noting the fact that Jenner & Block has represented GM in other litigation.

Valukas represented GM for several years in the mid-2000s, when the SEC investigated accounting errors at GM and the automaker was forced to repeatedly restate its financial results. The probe centered on GM’s relationship and transactions with its former parts unit, Delphi Corp., as well as GM’s use of credits from other suppliers. The SEC also has investigated whether GM improperly sought to influence Delphi and whether it properly spun off the unit in 1999.

Barra has offered little to explain what went wrong, except to tell a congressional committee in April that GM had “more of a cost culture” than a focus on consumers before its bankruptcy reorganization.

GM may finally give answers to troubling questions, such as why an ignition switch redesigned in April 2006 didn’t get a new part number. Barra in April called that “an unacceptable practice. That is not how we do business.” Other lingering questions include: Why didn’t its legal staff didn’t share more information with safety engineers? And how high up did knowledge of the problem rise?

A September 2005 GM email released by Congress showed that engineers opted not to fix the ignition switch because warranty savings would not be offset by the costs of improving the switch: It would cost 90 cents, but the warranty savings was just 10 cents to 15 cents. Barra has called that analysis “inappropriate.”

Wall Street cheered news that GM is issuing its findings, sending shares up more than 3.5 percent to close at $36.52 a share on Wednesday.