Transcript: Sen. Claire McCaskill’s Q&A with GM CEO Mary Barra on the ignition switch recall

Partial transcript of Sen. Claire McCaskill’s (D-Missouri) Q&A with General Motors CEO Mary Barra on “Examining the GM Recall and NHTSA’s Defect Investigation Process”. The U.S. Senate Committee on Commerce, Science, and Transportation’s Subcommittee on Consumer Protection, Product Safety, and Insurance’s hearing was held on April 2, 2014:

Sen. Claire McCaskill (D-Missouri):
I want to briefly go through your resume beginning in 2004 when this defect was discovered by someone at GM. You were executive director of manufacturing engineering from 2004-2005. In 2005-2008, you were executive director of vehicle manufacturing engineering. From Feb. 1, 2008 to July 2009, you were vice president of global manufacturing and engineering. From July 30, 2009 to Feb. 1, 2011, you were vice president of global human resources. From Feb. 1, 2011 to August 2013, you were senior vice president of global product development. And from August 2013 to Jan. 15, 2014, you were executive vice president of global product development. Is that a correct rendition of your resume over the last decade?

Mary Barra, CEO of General Motors:
Yes.

Sen. Claire McCaskill (D-Missouri):
In April and May of last year, GM’s employees were deposed in the lawsuit trying to get some kind of justice for Brooke Melton. They were confronted in the deposition with the fact that there were two different parts with the same part number and the different torque on both of those parts leading to the malfunction of the ignition switch. At that deposition, General Motors had a lawyer, and it was very clear at that deposition that there were two parts with the same number and that they had been switched out and that one of them was defective. When that lawyer for General Motors left that hearing, who did he report to?

Mary Barra, CEO of General Motors:
I don’t know which lawyer was at that trial so I can’t answer that question.

Sen. Claire McCaskill (D-Missouri):
Well, hold on and I’ll get it for you. You have some lawyers with you today, don’t you? Don’t you have your General Counsel with you?

Mary Barra, CEO of General Motors:
Yes, I do.

Sen. Claire McCaskill (D-Missouri):
You’re free to confer with him if he would like to tell you who that lawyer reported to after that deposition.

Mary Barra, CEO of General Motors:
Again, we are doing a full investigation with Mr. Valukas and all of the individuals that are associated with this incident will be a part of that and the findings will be conclusive.

Sen. Claire McCaskill (D-Missouri):
It was Mr. Philip Holladay appearing on behalf of General Motors from King & Spaulding law firm in Atlanta, Georgia.

Mary Barra, CEO of General Motors:
So he didn’t report to General Motors then. He was part of King & Spaulding.

Sen. Claire McCaskill (D-Missouri):
Well, he would have reported to his client. He was there representing you. He was your agent at that deposition.

Mary Barra, CEO of General Motors:
Yes.

Sen. Claire McCaskill (D-Missouri):
So he would have – I guarantee you if I’m a lawyer and I’m at a deposition where this bomb shell has been dropped on my client – that there are two different parts with the same number, one of which is defective – I guarantee you I don’t go back and tell the folks at the law firm, I’m on my cell phone in the lobby saying to General Motors, “We’ve got a problem.”

I need to know who would typically be – would it be the General Counsel’s office – that the lawyers that you hire would report to you on litigation?

Mary Barra, CEO of General Motors:
It would have been part of the senior legal team.

Sen. Claire McCaskill (D-Missouri):
Okay. It would be very important for us to identify who that lawyer reported to after that deposition.

Mary Barra, CEO of General Motors:
I will – that will be part of Mr. Valukas’s investigation.

Sen. Claire McCaskill (D-Missouri):
Now, I’m assuming that when that happens, there’s an investigation internally.

Mary Barra, CEO of General Motors:
One of the findings that we’ve had from Mr. Valukas already as he’s done his study is that within General Motors there were silos and as information was known in one part of the business – for instance, the legal team – it didn’t necessarily get communicated as effectively as it should have been to other parts – for instance, the engineering team. That’s something that I’ve already corrected today.

Sen. Claire McCaskill (D-Missouri):
Ms. Barra, I’m not asking whether or not the lawyers called the engineers. I’m asking whether lawyers in a multi-million dollar lawsuit where there has been evidence of a defective switch and a replacement that it had never been identified to the public being presented to the lawyers of your company not reporting up to the executive level of your company. Those lawyers work for the executive level. They don’t work for the engineers. They’re hired by your senior counsel. That’s who hires those lawyers – his office – correct?

Mary Barra, CEO of General Motors:
Yes.

Sen. Claire McCaskill (D-Missouri):
Okay. So what I want to know is what investigation began after that deposition?

Mary Barra, CEO of General Motors:
That is part of the investigation –

Sen. Claire McCaskill (D-Missouri):
So you don’t know whether or not anything happened after that investigation.

Mary Barra, CEO of General Motors:
I don’t have the complete facts to share with you today.

Sen. Claire McCaskill (D-Missouri):
Well, that is incredibly frustrating to me that you wouldn’t have a simple timeline of what happened once you got that knowledge.

So, it went on for 9 months. You have no idea even though you were in the executive level of leadership at the company at the time. It was never discussed anywhere in your presence for 9 months even though this has occurred?

Mary Barra, CEO of General Motors:
Correct. I became aware of the defect and the recall on Jan. 31st.

Sen. Claire McCaskill (D-Missouri):
Okay. So let me do quickly that. On Feb. 7th, you issued the first recall. 12 days later, Mr. Cooper – the trial lawyer – wrote to NHTSA pointing out that in addition to the recall that you’ve done, it was not complete. He pointed out there were 4 other models that have the defective ignition. 6 days later you in fact recalled those vehicles.

On Monday of last week, Mr. Cooper filed a court pleading in California alleging that there were additional cars that should have been recalled and had not been recalled because they had defective switches in them during repairs. Last Friday, 4 days later after that pleading, GM finally issued a third round of recalls.

Is this the new GM, Ms. Barra? Is this the new GM that takes a lawyer having to write to NHTSA and a court pleading in court for you to finally recall all the cars that have been impacted by this defective switch?

Mary Barra, CEO of General Motors:
As we looked at the first population of vehicles, we immediately go and read across to the other vehicles that may have the same part. Often when you have the same part in another vehicle, it can be a different configuration, a different geometry. As we looked into that population, we then recalled that population. And then we immediately started to look up where were the spare parts. From a General Motors perspective, for GM dealers, we could go to dealer records and understand where a dealer put a spare part into a vehicle. We knew that then. But then as we worked with our supplier, we learned that they had sold these parts to other third party repairs where there were no records kept. When we learned that, we immediately went out and recalled the entire population of all of these vehicles because we couldn’t be certain if there was a vehicle that had a part put in that we couldn’t track.

Sen. Claire McCaskill (D-Missouri):
And I think it’s great that you’ve done that all. It’s just worrisome to me that it took three shots after 9 months.

Sen. Claire McCaskill (D-Missouri):
Ms. Barra, how many lawsuits relating to the defect both pending and closed as well as settlements has GM been a defendant or a co-defendant?

Mary Barra, CEO of General Motors:
I don’t have that information. I can provide it to the committee.

Sen. Claire McCaskill (D-Missouri):
I’m assuming you’ve had some briefing from your counsel about your exposure on this defect?

Mary Barra, CEO of General Motors:
We have not talked about exposure. We have – it’s very important once we realized this situation we immediately hired Anton Valukas. We don’t want to have multiple investigations. We thought it was most important to have –

Sen. Claire McCaskill (D-Missouri):
I’m not asking about investigations. I’m saying as the CEO of General Motors you have not had a briefing by your General Counsel about the litigation that is ongoing against your company concerning this defect. You’ve not had that conversation?

Mary Barra, CEO of General Motors:
I’ve been focused on getting the parts for customers.

Sen. Claire McCaskill (D-Missouri):
We would like to know how many cases have been filed. We would like to know how many cases have been completed. We would like to know how many are settled. And most importantly, how many of those required confidentiality? How much whack-a-mole has been going on in terms of trying to deal with these lawsuits on a one-off basis and leveraging what a lawyer wants to do for their client with the requirement of secrecy.

Has Mr. [Ray] DeGiorgio been fired?

Mary Barra, CEO of General Motors:
As the investigation’s only been going on for a couple of weeks, we have already make process stuff. As I return to the office, we will start to look at the people implications.

Sen. Claire McCaskill (D-Missouri):
So he has not been fired?

Mary Barra, CEO of General Motors:
He has not.

Sen. Claire McCaskill (D-Missouri):
Is he still working there everyday?

Mary Barra, CEO of General Motors:
Yes.

Sen. Claire McCaskill (D-Missouri):
And you know that he lied under oath.

Mary Barra, CEO of General Motors:
The data that’s been put in front of me indicates that but I’m waiting for the full investigation.

Sen. Claire McCaskill (D-Missouri):
Okay. Let me help you here. He said several times he had no idea that these changes have been made. Here’s a document that he signed under his name – Mr. Ray DeGiorgio – he signed it on April 26, 2006 approving of the change. Now, it is hard for me to imagine you would want him anywhere near engineering anything at General Motors under these circumstances. And I for the life of me can’t understand why he still has his job, and I think it is – I know you want to be methodical. I know you want to be thorough. I know you want to get this right. But I think it sends exactly the wrong message that somebody who perjured repeatedly under oath – he wasn’t just asked the question once; he was asked the question over and over again.

Now, here’s the really important question. This document, which is completely relevant to any lawsuit that is filed against GM in these crashes, would have been included in any document request from any lawyer representing a family. This document was not given to Mr. Cooper. This document was withheld from the lawyer representing the family of Brooke Melton. He didn’t even find out about this document until after his case has been settled. How do you justify withholding a key piece of documentary evidence in a litigation concerning a part that was changed without a part number change and that is spelled out in this document for anyone to read? How does that happen?

Mary Barra, CEO of General Motors:
I cannot – I don’t condone not providing information when requested in a legal proceeding. And if that was done, we will deal with the individual who’s accountable for that.

Sen. Claire McCaskill (D-Missouri):
Well, I think it’s very important that we find out how many cases this document was provided to counsel in when it was request. It’s clearly within the scope. I guarantee you there’s not a request for documents being made at GM around these cases that the scope of the request did not include this document.

And I want to know how many cases they buried this document because this is what happens in America. Corporations think they can get away with hiding documents for litigants and there’ll be no consequences. And I want to make sure there’s consequences for hiding documents because this is hiding the truth from families that need to know, and it’s outrageous and it needs to stop.

Last month, the Department of Justice announced a $1.2 billion settlement in a criminal case against Toyota. It resulted in a massive recall on unintended acceleration. We’ve talked about it in these hearings. What is particularly relevant to you – and I want to put this on the record – is the facts around the re-design of a part in that criminal case.

And I’m going to quote from the facts of that settlement. Toyota re-designed the part using “a designation that entailed no part number change.” Department of Justice said that Toyota engineers did this explicitly to “prevent their detection from NHTSA”.

And I know this is gone over with you time and time again, but I want to make sure that we get that on the record, that we have had it occur with another car manufacturer.

Finally, I want to just talk for a minute about the nature of the defect. I’m confused about this.

When I was going through the documents preparing for this hearing, in his testimony, Acting Administrator [David] Friedman said that GM’s own technical specifications for the Cobalt called for the airbag system to contain an independent power source that is armed and ready to fire for up to 60 seconds after the vehicle’s power is cut off. That’s in GM’s specification to NHTSA. Is that an accurate description of the technical specifications?

Mary Barra, CEO of General Motors:
I don’t know. We’d have to go back and review that and I can provide that information.

Sen. Claire McCaskill (D-Missouri):
Because there seems to be a problem here. Because if the specifications say that airbag deploys when the power is off and we know these airbags are not deploying when power is off, then we’ve got a much bigger problem. That means we could have airbags across the entire automobile industry that do not have the appropriate sensors in there to allow for the deployment even when the power has gone off during some kind of collision or in this case because of a defective part. That would be information we would also like you to follow up on.

Finally, two things for the record. Will you commit to coming back in front of this committee when you can answer the questions?

Mary Barra, CEO of General Motors:
Yes.

Sen. Claire McCaskill (D-Missouri):
And secondly, all the information you’re providing to NHTSA on Friday, would you be so kind as to provide a copy of all of that information to this committee?

Mary Barra, CEO of General Motors:
Yes.

Sen. Claire McCaskill (D-Missouri):
Thank you.

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