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GM's Barra Faces Senate Interrogation


Mary Barra, chief executive officer of General Motors during a Senate Consumer Protection, Product Safety, and Insurance Subcommittee hearing in Washington, on July 17

Photograph by Andrew Harrer/Bloomberg

Mary Barra, chief executive officer of General Motors during a Senate Consumer Protection, Product Safety, and Insurance Subcommittee hearing in Washington, on July 17

General Motors (GM) Chief Executive Officer Mary Barra is before Congress today for the fourth time this year, taking a hammering from the Senate Commerce Committee on her company’s fatally indifferent response to catastrophic defects in its cars. Ignition switches that slip into the off position while cars are in motion and have led to crashes and disabled airbags have been linked to at least 13 deaths and dozens of wrecks.

Senators Claire McCaskill and Barbara Boxer, Democrats from Missouri and California, respectively, were among the lawmakers assailing Barra. The CEO is testifying with GM’s top lawyer, Michael Millikin; Anton Valukas, a former U.S. Attorney who investigated the company at its request; Kenneth Feinberg, an outside expert who’s running GM’s victim compensation fund; and Rodney O’Neal, the CEO of Delphi Automotive (DLPH), a supplier that made the ignition switch.

It took GM more than a decade to recall the Chevrolet Cobalt and other cars with the faulty switch, ignoring a stream of reports that the part led to fatal crashes. “I think the failure of the legal department is stunning,” McCaskill said.

“I don’t get how you and Lucy Clark Dougherty still have your jobs. Can you explain that to me?” she added, referring to GM’s general counsel for North America.

Barra responded that Millikin “is a man of tremendous integrity” and that she needs “the right team” to turn GM around.

GM shares have swung this year as the market digests the unfolding scandal, as well as the scope of the automaker’s legal liability, which is expected to reach into the billions, and the recall of almost 26 million cars. Over the last three months the stock has returned 10.5 percent. Since the beginning of the year it has lost 7.4 percent.

GM sold 4.92 million cars and trucks in the first half of 2014, up 1.4 percent from the first half of 2013.

Bloomberg Businessweek revealed in a June cover story that GM’s problems extend beyond red tape and passing the buck. The company shut down two whistle-blowers who had attempted to get safety problems fixed in the years leading up to the Cobalt problems. The stalled career of one of the men, Courtland Kelley, led his successor to act more timidly about the Cobalt’s flaws, that man told the Valukas investigation.

Summers_190
Nick Summers covers Wall Street and finance for Bloomberg Businessweek. Twitter: @nicksummers.

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