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GM Sets an Example of an Honourable Response to a Crisis

Lee Iacocca’s portrait of Mary Barra in Time Magazine’s recent ‘100 Influential People’ issue is upbeat and optimistic. He says “it’s about time someone of Mary Barra’s caliber and experience was appointed to the coveted position of General Motors CEO.”

He goes on to say that her background is “much the same as [his],” so all should be well and she “should enjoy a long tenure at the helm.” This conclusion is also based on his assessment of her recent testimony to Congress in its investigation of General Motor’s now decade-long faulty ignition switch fiasco. The key to her long-term success, he says, is for her to remain as forthcoming as she then appeared to be.

Under Ms. Barra’s new leadership, being forthcoming does appear to be the ‘game-plan’. Last week, GM acknowledged that in failing to notify the government about the defective switches in accordance with the timelines required by the National Highway Traffic Safety Administration—now linked to at least 13 North American road deaths—it broke US laws. This response to the $35 million fine levied against the company by the US Transportation Department contrasts with the timing of Toyota’s admission of wrongdoing in its massive recall case of 2009-2010 —reportedly after it reached a settlement with the Justice Department early in 2014.

Reporters who watch Ms. Barra note that she has been “consistently repentant in her public statements about the recalls, apologizing before Congress, in speeches, in videos posted on the company website. This is not a CEO who is asking everyone to “wait until all the facts are in.” The gist of her message: “We have learned a great deal from this recall. We will now focus on the goal of becoming an industry leader in safety… We will emerge from this situation a stronger company.”

Ms. Bara’s actions are also consistent with her messages. Internal investigations into the handling of the ignition-switch problem are being conducted by Anton Valukas, chair of the century-old national law firm Jenner & Block whose recent distinctions have included appointment by the court as examiner in the Lehman Brothers bankruptcy, reportedly the largest bankruptcy in United States history.

Internal investigations of all matters surrounding defects are also underway—policies regarding identification, internal and external reporting. The Wall Street Journal has also reported that GM’s board of directors has hired lawyers to review how information about the recalls failed to “get to directors’.

In Canada, whether or not Transport Canada will similarly pursue GM is unclear. Media reports indicated that any hearings into the matter by the House of Commons Transport Committee will be in camera and that while GM is required by law to inform Transport Canada of defects, it did so in February 2014. In Canada, the maximum fine under the Motor Vehicle Safety Act for failing to report is $1 million.

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