Congress Asked to Investigate Whether Obama Administration Delayed GM Ignition Switch Recall
Today, we requested that the House Committee on Oversight & Government Reform undertake an “independent” investigation of the General Motors ignition switch recall delay, in light of newly obtained emails by lawyers suing GM.
Those emails suggest that the Treasury may have timed its final sale of GM shares to precede public knowledge of the ignition switch fiasco. They also cast doubt on GM CEO Mary Barra’s previous account of what she knew and when she knew it.
Here is the text of a letter I sent today to Rep. Jason Chaffetz, in photo, the incoming Chairman of the Oversight & Government Reform Committee:
At a February 2010 Oversight Committee hearing on the risk from Toyota gas pedals, you asked a remarkably prescient question: “Does the government treat Toyota the same as it does all other automakers?”
Then-Secretary of Transportation Ray LaHood was unable to explain why the 2009 Toyota Corolla, which had received 84 complaints, was under NHTSA investigation, while the Chevrolet Cobalt, which you happened to own at the time, was not under investigation despite receiving more than 1,100 customer complaints.
Today, with the acknowledged death count of GM’s ignition switch defect more than double what it was the last time Congress held hearings on this shocking scandal, that question remains as pressing as ever.
Now, as in 2010, NHTSA’s failure to catch GM’s defects even in light of overwhelming evidence is deeply troubling. But your tough questions about the government’s ability to regulate an automaker it rescued from bankruptcy are just as relevant for all levels of government involved. The Department of Justice opened a preliminary inquiry into GM’s handling of the ignition switch defect more than eight months ago, but it has yet to report to Congress on its progress.
Moreover, the architects of GM’s bailout and indeed the President himself have repeatedly touted their roles in a transformation of General Motors’ culture that, based on the past twelve months, appears never to have taken place. Intriguingly, this scandal, which brewed at GM before and during government ownership, came to light almost immediately after the US Treasury exited ownership of GM, and Treasury-appointed Board member and CEO Dan Akerson resigned from GM.
In light of new emails uncovered by lawyers suing GM, the government’s role in the worst auto safety scandal in memory simply must be investigated. GM’s stock hit an all-time high on December 17, 2013, the same day GM held an “Executive Field Action Decision Committee” meeting about the ignition switch problem, exactly one day before GM placed an “urgent” order for 500,000 replacement ignition switches, and only seven days after the government exited its investment in GM. GM’s share price declined between this point and mid-February, when GM announced the recall, but this public announcement did not subsequently trigger a decline in GM’s share price.
This pattern at least raises the question of whether GMs shares were being sold off with advance knowledge of the impending recall scandal, whether the US Treasury may have timed its share sale in coordination with GM’s management of this scandal and whether insiders at GM warned any investors of the forthcoming bad news.
The following timeline, created from new information revealed in lawsuits against GM and first reported on by the Wall Street Journal, not only raises serious questions about what GM CEO Mary Barra knew about the scandal and when she knew it, but also suggests that GM transitioned into damage control on its ignition switch defect almost immediately after the resignation of GM’s then-CEO Dan Akerson and the government’s sale of its GM shares, and well before announcing the recall to regulators or the public:
December 9, 2013: The US Treasury sells its final shares of GM, losing $10 billion on the investment.
December 10, 2013: Dan Akerson announces his retirement as GM’s CEO. Mary Barra named as new CEO effective January 15th 2014.
December 16, 2013: GM’s Director of Global Field Performance Evaluation ”e-mailed two colleagues saying that she was “not clear on the ‘rush’ for tomorrow’s meeting,” adding “[w]e have skipped the step in the process where we talk execution details” and that she hoped to have a discussion rather than a decision “so we can understand the service procedure and the part availability, etc.”, indicating that the December 17th meeting was not about whether to do a recall, but about how to do the recall.
December 17, 2013: A meeting of GM’s Executive Field Action Decision Committee (EFADC) reviews the ignition problem, but according to the GM timeline submitted to NHTSA “Factual questions were raised at that meeting that required further analysis, the findings of which were presented at a second EFADC meeting on January 13, 2014. This second meeting is when the decision to recall was made, and when GM CEO Mary Barra says she first found out about the specifics of the problem.
December 18, 2013: An email from General Motors contract worker Sarah Missentzis to her counterpart at Delphi, Susan Dowling, placed an “urgent” order for 500,000 replacement ignition switches to be delivered “ASAP.”
January 7, 2014: An email from Ms. Missentzis to Ms Dowling, walked back plans to secure replacement parts “by the end of the year,” saying, “I spoke with Chris Witt [GM's Vehicle Recall Manager] and she confirmed my thoughts that is will be (sic) a phased launch due to volume. It involves 709,000 (model year 2005-2007) Cobalt/Pursuit/G5 vehicles.”
January 14, 2014: An email from Ms. Missentzis to Ms. Dowling reads, “Please provide the plan we spoke about last week. I need to provide the planning team something tomorrow.”
January 15, 2014: An email from Ms. Missentzis to Ms. Dowling asks, “Please get back to me today with your ship plan. Please understand that we have to be able to provide timing and see what we can do to improve it. Delphi was notified of this urgent issue before Christmas and I have yet to see a plan. Please get me something by 4PM today!!”
January 15, 2014: Mary Barra officially assumes the title of GM CEO.
January 21, 2014: An email from Delphi, which provided a plan for shipping the 500,000 parts (attachment with timeline not included)
January 27, 2014: An email from Ms Dowling to Ms Missentzis says “the Chinese New Year is throwing some issues in the time”, but saying that Delphi had provided GM with a quote that they could “begin shipping to GM CCA (5) weeks after the receipt of the spot buy PO from GM CCA” if they get confirmation from GM that day. If GM is unable to do it that day, it will take 8 weeks after receipt of the spot buy PO.
January 27, 2014: An email from Ms. Missentzis to Ms. Dowling arguing that GM will be unable to provide a quote because GM has to “evaluate the quote…”
January 30, 2014: An email from Ms. Missentzis to Ms. Dowling asking Delphi to provide “a revised timeline now that the PR #’s have been issued and the PO is making its way through the system.”
January 31, 2014: An email from Ms. Dowling to Christine Witt-Leech of General Motors asking to “confirm the dollar value on each of the PO’s”.
January 31, 2014: According to her testimony to Congress, the first time Mary Barra learned of the need for a recall.
February 5, 2014: An email from GM’s Christine Witt-Leach to Ms. Dowling asking if Delphi can provide “ship quantities and ship dates of this part to GMCCA from 2006 to 2009. Our records show a receipt in July 2006 and then no other shipments or receipts until January 2009! Do you know if there was a different part number shipped for this vehicle usage between 2006 and 2009? We are very puzzled why there is a three- year gap in shipments of PN 10392423. My engineering file doesn’t show any part number change history either.”
February 11, 2014: An email from Ms. Missentzis to Ms. Dowling reporting that “The smaller PO has been approved by Finance and is in the final stages of completion. The larger PO is still pending Finance approval, likely due to the amount.” An email later that day said Delphi would probably find “everything in line on Monday.”
February 13, 2014. An email from GM’s Christine Witt-Leach to Ms. Dowling saying “This ‘Safety’ issue has been reported to NHTSA today. GM now has 60 days to notify all involved vehicles owners. This takes us to around April 8. (when we will only have around 50,000 pcs from Delphi). … I have shared your shipping plan with my management, and as a result we will plan to begin notifying vehicles owners in early April.”
It defies common sense to believe that the preceding sequence of events took place without Mary Barra’s knowledge. It further strains credulity to believe that after a decade of investigation into issues surrounding the defective ignition switch, an “urgent”
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