Howes: Exoneration comes hard in GM ignition-switch settlement
The worst of General Motors Co.’s deadly ignition-switch fiasco may be over, but the toll is anything but.
Shoddy engineering, enabled by reprehensible posterior covering, claimed at least 124 lives and 270 injuries certified by Ken Feinberg, head of the GM-backed independent compensation fund. It cost $625 million in claims, $900 million in fines and a three-year deferred prosecution agreement with the feds.
A separate agreement settled 1,380 pending civil lawsuits not covered by Feinberg’s work, prompting GM to take a $575 million charge; other suits not covered by the settlement will go forward. A two-count criminal “information” unveiled Thursday in New York charges GM with wire fraud and scheming to conceal fatal safety defects from federal regulators and the public — which it clearly did.
Exoneration? Hardly. Whatever the legal technicalities of GM’s agreement with the feds, or its settlement of outstanding litigation, the ignition-switch scandal could stand as Exhibit 1 in an unofficial indictment of corporate skullduggery.
People died because the automaker’s employees discovered engineering mistakes, covered them up and misled customers, the public and federal regulators. The company admits wrong-doing, chiefly because the evidence is so strong, but no one is indicted and no one is going to jail — at least not yet.
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Not because corporations are evil; as inanimate structures they cannot be. But because the people who work inside them — from engineering departments and factory floors to C-suites and the general counsel’s office — can be, making bad decisions because they are too insulated from accountability and the real people who use their products.
Too often that begets corner-cutting to cut costs, instead of understanding that spending precious corporate bucks to re-engineer a fix is less costly in time, money and reputation than a dissembling cover-up with devastating implications. Add callous disregard for the welfare of others, and you begin to approach GM’s epic screw-up.
CEO Mary Barra was on the job only a few weeks when she learned of the disaster festering inside GM’s engineering ranks and legal department. This week’s settlement with the feds signals a turning point in the mess, even if it fails to erase fully doubts that GM and its most culpable (former) employees are getting off too easy.
Last year, GM cashiered 15 people associated with the scandal, including a senior lawyer long regarded a close confidant of then-General Counsel Mike Millikin. More firings are not likely, Barra signaled, a fact likely to rankle families who lost people in GM cars.
Notwithstanding the criminal charges leveled by the feds, the $900 million fine, the $625 million in expected compensation claims and a $575 million charge amount to less than GM’s adjusted pre-tax profit of $2.8 billion in North America last quarter.
Barra again told employees Thursday that she wants no one to forget the humiliation and consequences of GM’s failures. That’s a memory leadership must enforce because the financial hit is comparatively small to a company the size of GM.
“People were hurt and people died in our cars,” Barra told employees at GM’s Vehicle Engineering Center in Warren. “We let those customers down in that situation. We didn’t do our job. Apologies and accountability won’t change much if we don’t change our behavior.”
She’s exactly right, of course. The New GM, as the phrase goes, is in the behavior-change business. From labor relations and investor relations to engineering, manufacturing and marketing, the successor to the most spectacular bankruptcy the industry has ever seen is a big corporate exercise in reinvention — and the results are far from complete.
The rub is that a whole lot of people, from retired executives to wary customers and would-be investors, aren’t sure the company’s leadership can deliver the change Barra promises. More, Thursday’s settlement won’t eliminate skepticism that more people still in positions of power knew more about the ignition-switch mess than have so far been implicated.
Atonement requires more than paying $1.5 billion in fines and compensation claims, scant comfort to families who lost loved ones in GM cars. It requires practicing consistently the transparency, change and performance that Barra and her team preach.
Daniel Howes’ column runs Tuesdays, Thursdays and Fridays and can be found at http://detroitnews.com/staff/27151.
Catch him 3 and 10 p.m. Thursdays on Michigan Radio’s “Stateside,” 91.7 FM.