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U.S. senator accuses GM of 'culture of cover-up' in recalls

(Reuters) - General Motors Co came under withering attack for its decade-long failure to notify the public about defective parts linked to fatal crashes, as a U.S. Senate hearing opened on Wednesday with accusations that the company fostered "a culture of cover-up."

Democratic Senator Claire McCaskill rebutted some of GM CEO Mary Barra's testimony to a House of Representatives panel on Tuesday that her company had recently cleaned up its act.

"It might have been the 'Old GM' that started sweeping this defect under the rug 10 years ago. Even under the 'New GM' banner, the company waited nine months to take action after being confronted with specific evidence of this egregious violation of public trust," the Missouri senator said.

McCaskill chairs a Senate subcommittee on consumer protection and product safety that is investigating GM. The "Old GM" and "New GM" she referred to were references to General Motors before and after its 2009 bankruptcy.

Committees in the House and Senate are investigating why it took GM more than a decade to recall 2.6 million cars that could have faulty ignition switches and may have contributed to at least 13 deaths. The largest U.S. automaker also faces a criminal probe by the Department of Justice.

Those switches, without warning, can make vehicle engines stall during operation and stop air bags from deploying and power steering and power brakes from operating.

McCaskill said that "a culture of cover-up" caused a GM engineer to deliver untruthful testimony about his knowledge of the defective ignition switch, as part of a lawsuit related to a fatal 2010 crash in Georgia.

Barra, who was promoted to CEO in January, said in her prepared testimony: "While I can't turn back the clock, as soon as I learned about the problem, we acted without hesitation."

As lawmakers over the past two days have pressed Barra for answers on who at GM was responsible for the company's slow response, Barra has referred repeatedly to an internal investigation of the problem that is under way.

Barra told senators the internal probe is "well along," adding that GM hopes to wrap it up in 45-60 days.

GM was not alone in the hot seat during the Senate hearing.

McCaskill, a former prosecutor, complained of the National Highway Traffic Safety Administration's "failure to spot a trend" with GM's ignition switches. That failure came despite a 2000 law aimed at giving the agency improved resources for spotting automaker safety troubles, she said.

Nevada Senator Dean Heller, the senior Republican on the panel, noted that in 2006 or 2007, GM replaced the troubled switch with a redesigned part, but did not change the identifying numbers for the new switch.

"If a company sold a part that was changed in any way and did not change the model number or the serial number on that part it would cause significant problems," Heller said.

Barra responded that issuing a new part without new model or serial numbers was "completely unacceptable."

Republican Senator Kelly Ayotte of New Hampshire shot back: "I think it goes beyond unacceptable. I believe this is criminal."

Besides raising red flags in Congress that the company's use of the same part number could have been an attempt to cover up the redesign at a time GM was insisting it had no problem, documents submitted to Congress also show that the redesigned switch did not meet all of the company's specifications.

In a 2013 deposition related to a suit against GM, Ray DeGiorgio, a senior switch engineer, said he was unaware of a change in the part. But documents submitted by GM to Congress show the engineer signed off in April 2006 on the redesign of the ignition switch.

He is still employed by GM, which has not made him available to comment. While no one has been fired for their involvement in the company's mishandling of the ignition switch, Barra has promised swift action if it is merited once the company's internal probe is completed.

Meanwhile, House Speaker John Boehner, a Republican, told reporters that it was too early to conclude that tougher auto safety legislation would emerge from the congressional investigations.

Noting that about 230,000 pages of documents have been turned over to Congress, Boehner said: "I think it's important for us to get to the facts before we begin to pronounce what we're going to do or not do."

(Additional reporting by Doina Chiacu and David Lawder, writing by Richard Cowan; editing by Dan Grebler and G Crosse)

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dpedron April 02 2014 at 5:38 PM

It is a disgrace that GM has conducted itself as they have for many yrs. This is awful but I do have to say that this new GM CEO, Barra, the first female to head GM ends up with all the sh..t. She's been in this position only since Jan. I believe all the prior CEOs and the good ole boys top management were more than aware all along there at GM, and handed her this totally disturbing and criminal malfeasance making her the scapegoat. Remember Roger Moore's film on this corporation, Roger & Me. Roger Smith a total swine.

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craigmacrina dpedron April 02 2014 at 5:46 PM

Far from true. She is part of the good ole boys or she would not be where she is. She was born into GM. She is part of the problem as she has been indoctrinated into the GM culture. If you worked for GM in any sort of management capacity you would understand what I am talking about.

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dpedron craigmacrina April 02 2014 at 5:57 PM

I know she was with GM since day one, I still don't believe she got put in this position because GM felt charitable? and non-sexist? I DO know what it was like as a female working in Aerospace manufacturing for one of the Fortune 50 companies in a salaried position and in a company dominated by men. I did it for 11 yrs and put up with sexism and harassment back in the 80's/90s. I know what that culture is like. I had no interest climbing the ladder. But let's be fair. I truly don't believe she was privy to everything that is now blowing up in the company's face because she wouldn't have accepted the position if she had any brains, and I don't think she's a dummy. I am sure many of the employees, salaried or hourly union have that uncomfortable position working for an American corporation and the culture that exists within all . GM isn't the only one.

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Joe April 02 2014 at 4:50 PM

Since the Government has gotten involved in the auto industry, GM, Government Motors, in particular. The care and concern for it's customers has dropped to an all time low. GM spends more time trying to avoid honoring warranties and hiding defects. GM should step up and take care of problems as they occur. The GOVERNMENT bailout was money from the American public. NEVER FORGET THE GOVERNMENT DOEN'T HAVE ANY MONEY THEY DIDN'T TAKE FROM SOMEONE. I was a loyal GM customer for about 30 years, NEVER again.

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Les Jones April 02 2014 at 4:50 PM

Read GM's History The Book is an old one " Chrome Colussus" circa 1980's The company has consistently put money before safety. In the 30's Alfred P Sloan would not adopt safety glass in Gm cars for almost a decade . In the book the pattern is clear . Every safety or emission change was fought tooth and nail by the bean counters in the company . The corsair rollovers would not have happened were a ten dollar part been installed as their own engineer recommended. They fought seat belts for almost ten years saying their customers did not want to pay for them. I just recently re read this old book and it was incredible how the companies DNA or culture or what ever you want to call it fought progress and change as a matter of policy. It was always , these things add too much cost . Hard to see change in the new company " Todays GM" Same as it ever was , Same as it ever was

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doughwrite April 02 2014 at 4:50 PM

Yes, indeed, what a joke!! Like how our government covers up every f----g thing it does, from the pres on down. Why the military covers up every atrocity they commit. Yeah, you might say it's our culture, the culture of this whole country and every institution in it. Cover up and cover your ass.

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Veri Bad KARMA April 02 2014 at 4:49 PM

and the Senate - via letting the lead IRS people take the 5th is a culture of elitism and idiocity.

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sbcal85 April 02 2014 at 4:48 PM

"General Motors CEO is defending the company for the second day now against charges of covering up a deadly defect", this is a CEO who has taken lessens in Cover-up and embarrassing failures of Leadership just like the President of America over Obamacare...

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salt1950chev April 02 2014 at 4:47 PM

GM alway did cheapen it's cars, in a few they start to ware out!

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harolddundee April 02 2014 at 4:47 PM

What you have is a bunch of politicians grand standing for the TV camera.

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epr70 April 02 2014 at 4:47 PM

So, this coming from a US Senator? The one's who mastered the 'cover up'?

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finance454 epr70 April 02 2014 at 4:50 PM

ya but that is "their" cover up which is different from "their" cover up !!

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Albert April 02 2014 at 4:46 PM

hmmmph, of course GM needs to be scrutinized. But to be fair, those political agencies under "scrutiny" such as Benghazi and the IRS crap, sure don't seem to be getting the same probing questions and demands for answers as committees hold their kangaroo courts agains a private but public corporation.

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