GM CEO addresses employees about DOJ settlement

Melissa Burden and Henry Payne
The Detroit News

Warren — General Motors Co. CEO Mary Barra Thursday told employees not to forget what happened with the ignition switch crisis and apologized again to families of victims during an employee town hall on the company’s settlement with the Department of Justice. .

“People were hurt and people died in our cars,” Barra told hundreds of employees at the Vehicle Engineering Center here. “That’s why we are here today.”

The town hall also was broadcast to employees across the company. Barra described the agreement as “tough,” but said the automaker let customers down.

“We didn’t do our job and as part of our apology to the victims we promise to take responsibility for our actions,” she said.

Barra said GM accepts the penalties “because they are part of being held accountable.”

In a 15-minute press conference, Barra said GM board’s unanimously approved the settlement, but she did not elaborate on how the deal came together.

Earlier Thursday, the U.S. Attorney’s Office in Manhattan announced a $900 million, three-year deferred prosecution agreement with the automaker to resolve a criminal investigation into the delayed recall of the vehicles for ignition switch defects.

As part of its agreement, Mark Reuss, GM’s head of global product development, purchasing and supply chain, told employees that the automaker has made additional commitments to the federal government and an independent monitor “that we will be leaders in vehicle safety and we will be candid and transparent about that.”

Reuss told employees that Thursday’s “tough” settlement is “another step in a disappointing journey for all of us.”

He said GM should not be defined by its past mistakes, but he also stressed that employees should never forget what happened. The automaker has dramatically revamped its safety actions and culture following the recall crisis a year ago.

“When you make mistakes you accept them,” he said. “You take necessary steps to make sure you never make the same mistakes ever again.”

The two addressed employees for just under 15 minutes.

The settlement included two felony charges of wire fraud and misleading federal regulators and was announced by U.S. Attorney Preet Bharara in New York. The fine is lower than Toyota Motor Corp.’s $1.2 billion settlement in March 2014 for wire fraud, which has angered some including families of victims killed in crashes linked to the defect.

Laura Christian of Maryland, the birth mother of Amber Marie Rose, a 16-year-old who was killed in a 2005 crash tied to the ignition switch defect, said while there is “no fine high enough truly to account for what we’ve lost, to hear that their lives are so devalued, that’s hard to hear. That’s hard to accept.”

Barra was asked about the lack of criminal charges in the case and she said that decision will lie with the federal investigators.

“This was a tragic situation. We understand that lives were impacted. That is something that we understand and take forward and will have with us every day,” Barra said. “This was a tough agreement.”

GM’s independent fund approved compensation for 124 deaths and more than 270 injury claims tied to the ignition defect. GM expects to pay $625 million in compensation to victims and families.

Also Thursday, GM agreed to settlements of shareholder class actions suits filed in Detroit and 1,380 outstanding death and injury claims. GM is taking a $575 million charge in the third quarter to cover the settlements, which it is not breaking out.

GM has said its spending on the delayed ignition switch problem could total about $2.35 billion when including the expected payout of the compensation program. Barra said Thursday there was no way to estimate GM’s exposure to fines and settlements in ongoing litigation, and investigations with the Securities and Exchange Commission, Federal Trade Commission, state attorneys general and Canadian authorities.

Barra led a town hall meeting from the same location in June 2014 when she shared findings of the internal investigation into why it took GM more than a decade to recall 2.59 million Chevy Cobalts and Saturn Ions for the deadly ignition switch defect.

Barra fired 15 employees and disciplined five others a year ago based on findings from the internal investigation. When asked if she has fired or disciplined any others based on the DOJ investigation, Barra said Thursday the actions in June 2014 were comprehensive.

Whether the settlement with the Justice Department will deter future misconduct by automakers and companies is unknown, said Peter J. Henning, a Wayne State University law professor.

“This is not money coming out of any executive’s pocket or any individual’s pocket,” he said. “It’s really the shareholders who are paying this price.”

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