The Valukas Report to the General Motors Board of Directors Regarding Ignition Switch Recalls is a lengthy report that describes in excruciating detail how GM failed to uncover and remedy significant safety issues relating to an ignition switch used in various GM model cars.
It is easy to lose perspective when reading the report but GM’s basic safety breakdown directly led to the death of numerous individuals who could have survived dangerous crashes or even avoided the crash from occurring.
When you pick through the wreckage of GM’s conduct over a decade long period, there is plenty of blame to go around for failures to act by engineers, lawyers, senior executives and ultimately the GM Board of Directors.
At the core, GM’s safety culture suffered from a common trend in large organizations – no one wants to raise an unpopular issue and no one will take responsibility for an issue. GM had plenty of warnings and opportunities to address the issue of problems with the ignition switch but failed to act.
Even in the face of overwhelming evidence of significant problems, GM senior executives reacted slowly to issue a recall.
GM’s record of performance stands as one of the worst examples of corporate governance in United States history. There are plenty of lessons learned that can inform everyone’s compliance program.
Failure to report major safety issues: GM product safety litigation lawyers, including the most experienced and long-time GM attorney, failed to raise serous safety issues and related litigation issues to the attention of the General Counsel.
If the Valukas Report is correct, GM’s most senior product safety litigation lawyer failed to inform his supervisor, GM’s General Counsel, about a large number of cases pointing to the ignition switch problem that resulted in death or serious injury.
It is almost unbelievable to think that such a major issue and the attorney’s attempts to confirm engineering evaluations of the ignition switch issue would never be reported to GM’s General Counsel. As a result, GM’s senior management never received notice of the problem from its attorneys.
Culture of Silence: GM engineers, lawyers and business managers operated In a culture where the message was everyone is responsible and no one is accountable. Such a theme is common in large business organizations. People do not want to stand out and no one is ever assigned accountability.
The Valukas Report is replete with instances where people were supposed to be responsible for an issue but in fact they were never held accountable because there was no supervisory monitoring or direction to the engineers, lawyers and business people.
Absence of Chief Compliance Officer: The GM safety debacle occurred in an organization without a Chief Compliance Officer or compliance organization. As you read through the report and incident after incident in which no one ever raised the perspective of an ethics and compliance officer, it is easy to see how lawyers, engineers, and business people conspired among themselves, tacitly and through winks and nods, to avoid any major issues.
The report is a reminder on the importance of an independent CCO as an important check on lawyers and other corporate actors who may seek refuge in legal niceties over ethical and significant compliance and reputational issues.
There is much more that can be – and will be – written about the GM Debacle. We are just at the beginning of the investigation process.