Mary Barra, chief executive officer of GM, is sworn in before testifying at a House Energy and Commerce Committee hearing in Washington. GM engineers were well aware of serious problems with ignition switches in GM small cars, but rejected several opportunities to make fixes, according to documents.
Reuters/Washington/Detroit
General Motors engineers were well aware of serious problems with ignition switches in GM small cars, but rejected several opportunities to make fixes, according to dozens of confidential documents released on Friday by a Congressional committee investigating the deadly defect.
Parts supplier Delphi Automotive also repeatedly tested switches and found they did not meet GM specifications, according to e-mails and other memos.
The internal documents from GM, Delphi and a US safety agency chart numerous examples of switch failure, of the sort that led GM earlier this year to recall 2.6mn cars to replace defective switches now linked to at least 13 deaths.
The documents, the first tranche of some 250,000 pages, were released by the House Committee on Energy and Commerce, which last week grilled GM Chief Executive Mary Barra on the automaker’s slow response to problems that GM first documented in 2001.
Committee Chairman Fred Upton, a Michigan Republican, said the documents illustrate “failures within the system.” Other lawmakers have questioned whether GM’s action are criminal.
Meanwhile, a top official with the National Highway Traffic Safety Administration told General Motors in a July 2013 email that the automaker was “slow to communicate, slow to act” on defects and recalls.
Still to be answered is whether top GM executives were aware of the issues early on, as engineers struggled to pinpoint causes and solutions for ignition switches that could be turned off inadvertently with the vehicle in motion, causing the engine to stall and cutting power to steering, brakes and airbags.
GM says it is cooperating with Congress and conducting its own “unsparing” investigation of the circumstances that led to the recall.
The documents show the automaker repeatedly elected not to fix or replace the faulty switches, because there was no acceptable “business case”, an indication the solution was deemed too expensive.
Federal regulators as early as 2007 were concerned that GM was dragging its heels on safety measures as consumer complaints mounted, but top officials at NHTSA never followed through on staffers’ recommendations to open a broad investigation, according to the documents.
It was determined eventually by GM that the switches didn’t have enough torque, the rotational force required to keep them from moving from the “run” position to “accessory” which shut down the engine.
A root cause of the problem was a tiny set of parts, called a detent plunger and spring, that helped keep the ignition key in position while the car was running. A GM engineer at the automaker’s mid-Michigan test track encountered an early problem with the switch while driving a prototype of the 2003 Saturn Ion in July 2001.
An internal GM memo on the incident noted that a “tear down evaluation on the switch revealed two cause of failure. Low contact force and low detent plunger force.”
The memo said both issues were resolved with newer parts, and the case was closed that November, less than a year before the all-new Ion went into production. One of the engineers who signed off on the fix was Ray DeGiorgio, the designer of the switch.
DeGiorgio was one of two GM engineers placed on paid leave earlier this week as GM continues an internal investigation of the recall. GM did not explain the move and DeGiorgio could not be reached for comment.
Supplier Delphi submitted a batch of Ion switches in December 2001, but informed GM that its tests showed many of the switches did not meet GM’s torque specifications, according to GM validation documents. Nevertheless, GM approved the parts for production in May 2002, another document shows. The first Ion rolled off the line in August that year.
GM was already beginning to monitor customer complaints about engines stalling in the Ion in 2003, but noted “technicians are rarely able to duplicate the concern.”
In the meantime, the automaker had begun to develop a sibling to the Ion, the 2005 Chevrolet Cobalt. While testing some of the first cars off the assembly line in October 2004, engineer Gary Altman noted that “the driver’s knee bumped the key in such a manner as to turn off the ignition.”
Altman, the program engineering manager for the Cobalt and Ion, was the second GM engineer put on paid leave this week for undisclosed reasons. He could not be reached for comment.
Engineers considered possible remedies, but it was decided that “the tooling cost and piece price are too high” and the lead time required to make the change too long. The case was closed in March 2005, with engineer Blendi Sullaj noting, “None of the solutions represents an acceptable business case.”
Problems persisted with engines stalling in the Cobalt, which GM engineers by then had traced to the faulty switches.
Brazil’s Batista faces insider trading probes
Reuters/Rio de Janeiro
Eike Batista, who was Brazil’s richest man for most of the past decade, is under investigation by securities industry watchdog CVM for allegedly engaging in insider trading while he chaired his now-bankrupt oil-producing and shipbuilding firms.
In a statement sent to Reuters, Rio de Janeiro-based CVM confirmed that Batista is a respondent in six of nine probes that executives of his Grupo EBX conglomerate are facing for breaching securities rules. In two of them, regulators are examining whether Batista allegedly took advantage of his access to privileged information.
CVM also listed a dozen probes questioning financial and other data unveiled by oil company Óleo and Gás Participações SA and four more firms he controlled through EBX. If the probes lead to criminal charges against Batista, it would be yet another major blow to a businessman once hailed as the nation’s model entrepreneur and a symbol of Brazil’s economic success.
“If this turns out to be true it will be excellent news for investors who lost so much with OGX,” said Rodrigo Bornholdt, a partner with Bornholdt Advogados in Joinville, Brazil, which has been organizing minority shareholders for a lawsuit against OGX. “This would make it much easier for them to sue Batista, the corporate directors and the company.”
The demise of his energy, logistics and mining empire, which two years ago was valued at about $60bn, ended up in OGX filing for Latin America’s largest-ever bankruptcy in October. Under CVM regulations, Batista could face fines and be banned from running a listed company.
But he could also face criminal prosecution - which could put him in jail for as many as five years - and separate civil penalties if individual investors and companies sue him for damages, Bornholdt added.
Representatives for Batista, Oleo and Gas, and OSX did not immediately respond to requests for comment. .
According to a Valor Econômico newspaper report, CVM wants to determine whether Batista also withheld information that was unfavorable to some of his business while encouraging investors to buy more stock in his companies. During that time, Batista sold shares of the company, as well as its sister company and shipbuilder OSX Brasil SA.