Bloomberg Businessweek: GM Punished Those Who Spoke For Safety

Illustration for article titled iBloomberg Businessweek/i: GM Punished Those Who Spoke For Safety
The Morning ShiftAll your daily car news in one convenient place. Isn't your time more important?

This is The Morning Shift, our one-stop daily roundup of all the auto news that's actually important — all in one place every weekday morning. Or, you could spend all day waiting for other sites to parse it out to you one story at a time. Isn't your time more important?


1st Gear: Report: GM Was More Than Incompetent

The cover story for this week's Bloomberg Businessweek by Nick Summers and Tim Higgins goes beyond the Valukas Report in pointing out that, according to court documents and interviews, GM not only passively ignored possible safety issues because of systemic management problems, they also punished whistleblowers in a concerted effort to suppress problem reporting.


I'm going to excerpt the first bit because it's going to make you want to read the rest:

It was close to 3 a.m. on June 6 when Courtland Kelley burst into his bedroom, startling his wife awake. General Motors (GM), Kelley's employer for more than 30 years, had just released the results of an investigation into how a flawed ignition switch in the Chevrolet Cobalt could easily slip into the "off" position—cutting power, stalling the engine, and disabling airbags just when they're needed most. The part has been linked to at least 13 deaths and 54 crashes. GM Chief Executive Officer Mary Barra, summoned before Congress in April to answer for the crisis, repeatedly declined to answer lawmakers' questions before she had the company's inquest in hand. Now it was out, and Kelley had stayed up to read all 325 pages on a laptop on the back porch of his rural home about 90 miles northwest of Detroit.

The "Valukas Report," named for former U.S. Attorney Anton Valukas, who assembled it at GM's request from interviews with 230 witnesses and 41 million documents, blamed a culture of complacency for the more than decade-long delay before the company recalled millions of faulty vehicles. It described employees passing the buck and committees falling back on the "GM nod"—when everyone in a meeting agrees that something should happen, and no one actually does it. On page 93, a GM safety inspector named Steven Oakley is quoted telling investigators that he was too afraid to insist on safety concerns with the Cobalt after seeing his predecessor "pushed out of the job for doing just that." Reading the passage, Kelley felt like he'd been punched in the gut. The predecessor Oakley was talking about was Kelley.

Kelley had sued GM in 2003, alleging that the company had dragged its feet addressing dangers in its cars and trucks. Even though he lost, Kelley thought that by blowing the whistle he'd done the right thing and paved the way for other GMers to speak up. Now he saw that he'd had the opposite impact: His loss, and the way his career had stalled afterward, taught others at the company to stay quiet. "He stood in the doorway of our bedroom with a stunned look on his face," Beth Kelley, his wife of 23 years, says. "Maybe we're just extremely naive, but we really thought that since this all happened, that something good would come out of it."

I've invited the two authors of the piece in to discuss it if you have any questions.

2nd Gear: Congress Wants Answers

Illustration for article titled iBloomberg Businessweek/i: GM Punished Those Who Spoke For Safety

The Congressional subcommittee interviewing GM's Mary Barra today already released her testimony to the committee, but now we have some guidance into what they're going to say, via Melissa Burden.

A committee memo provides guidance on questions that will be asked: Does the Valukas report end GM's investigation? Does GM think the "systemic failures and mistakes" that were part of the delay of the Cobalt and Ion recall may have affected other investigations and recalls? How did the culture and problems identified by Valukas develop at GM, and how will GM address the problems?


I fear we're not going to learn anything new, but here we go.

3rd Gear: Did GM Actually Know About Stalling Issue?

Illustration for article titled iBloomberg Businessweek/i: GM Punished Those Who Spoke For Safety

The Valukas Report's main contention is that everyone should have been smart enough to figure out the connection between ignitions shutting off and airbag failures, but that they were too incompetent to figure it out and too incompetent to act on it.

Clarence Ditlow of the Center for Auto Safety says that's some bullshit.

Ditlow said Valukas' report "avoided and missed crucial facts and issues in constructing what amounts to a corporate defense against criminals charges" and "repeatedly omitted materials that show GM at its highest levels of management considers stalling to be a safety defect."


Harsh words.

4th Gear: Everyone Wants A Taste Of GM

Illustration for article titled iBloomberg Businessweek/i: GM Punished Those Who Spoke For Safety

And from The Wall Street Journal we get a wrap up of all the attorneys getting involved, from federal prosecutors to attorneys general from a number of states who are starting to interview GM employees.

Separately, a group of state attorneys general, including New York Attorney General Eric Schneiderman and Florida Attorney General Pam Bondi, is investigating the delayed GM recalls, according to their spokesmen. More are expected to follow suit, said James Tierney, the former Maine attorney general and the director of the National State Attorneys General program at Columbia University.


We're definitely still in the "Gets worse before it gets better" stage.

5th Gear: Victim Compensation Will Start August 1st

Illustration for article titled iBloomberg Businessweek/i: GM Punished Those Who Spoke For Safety

A little nugget buried in the testimony from Mary Barra that was released yesterday was that the Kenneth Feinberg-led compensation fund will start doling out funds on August 1st and that Feinberg has "full authority to establish eligibility criteria for victims and determine compensation levels."


This has me wondering if people who were injured pre-bankruptcy will still get funds even if legal challenges exist.

Reverse: This Makes Me Want To Go Watch Metroplitan

On June 18, 1923, the first Checker Cab rolls off the line at the Checker Cab Manufacturing Company in Kalamazoo, Michigan.

Morris Markin, founder of Checker Cab, was born in Smolensk, Russia, and began working when he was only 12 years old. At 19, he immigrated to the United States and moved to Chicago, where two uncles lived. After opening his own tailor's shop, Markin also began running a fleet of cabs and an auto body shop, the Markin Auto Body Corporation, in Joliet, Illinois. In 1921, after loaning $15,000 to help a friend's struggling car manufacturing business, the Commonwealth Motor Company, Markin absorbed Commonwealth into his own enterprise and completely halted the production of regular passenger cars in favor of taxis. The result was the Checker Cab Manufacturing Company, which took its name from a Chicago cab company that had hired Commonwealth to produce its vehicles.


Neutral: Does this Bloomberg Businessweek Report Change How You Feel?

Was there more to it than incompetence?

Photo Credit: Getty Images

Share This Story

Get our newsletter


Patrick George

Tim, Nick, outstanding work on this exclusive. It's pretty mind-blowing.

Why do you think so many of Kelley's supervisors were so against fixing the safety issues he pointed out or issuing recalls? Were they discouraged purely for cost reasons, or was it a public perception issue? People blame "the culture" at GM, but what does that mean exactly to you?

And speaking of the culture, which Valukas also criticized in his investigation, how do you think they can change that?