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GM set to reveal findings

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By Bloomberg News
Thursday, June 5, 2014, 12:01 a.m.
 

General Motors Co. on Thursday will reveal the findings of its internal investigation into why it took more than a decade to recall vehicles linked to fatal flaws, according to a person familiar with the effort.

The probe, headed by independent lawyer Anton Valukas, is based in part on 1 million documents released to Congress, said the person, who asked not to be identified because the planning is private.

The trove of material shows the automaker was hobbled by engineers who failed to detect a flawed ignition switch and a dysfunctional review system that delayed a recall for 10 years, people familiar with the matter said.

Chief Executive Officer Mary Barra will deliver Valukas' findings during a town hall meeting with employees in suburban Detroit, where she will explain what went wrong and what GM plans to do about it, according to one of the people.

The report marks a potential turning point in Barra's efforts to move America's largest automaker past the biggest legal and public-relations challenge since its government-backed bankruptcy in 2009. Barra, who became CEO shortly before the scandal broke, has attempted to persuade Congress and customers that the safety woes reflect the so-called “old GM,” not the post-bankruptcy version.

The Valukas report isn't expected to contradict her claims that she was unaware of the flawed switch, one of the people said.

A quick resolution would allow Barra and her team to capitalize on rebounding profits and the strongest sales since the collapse of Lehman Brothers.

GM shares rose $1.26, or 3.6 percent, to $36.52 on Wednesday, the biggest one-day gain in more than six months.

Still, Congress and the Justice Department continue to investigate GM over why it took more than a decade to recall 2.59 million small cars with defects linked to at least 13 deaths. The defective ignition switch could be jarred into the “accessory” position, disabling power steering and preventing air bags from deploying.

The failure to diagnose the problem was outlined in the documents turned over to Congress in recent weeks, the people said. The records show engineers struggling to address several issues with the vehicle's ignition switch, some of the people said. There were problems starting the cars that were perceived as a bigger issue than the stalling, these people said.

Barra suspended with pay Ray DeGiorgio, the engineer responsible for the ignition switch, and Gary Altman, the program engineering manager for the Cobalt until May 2005, people familiar with the situation have said. Records released in April by the House panel investigating GM show that DeGiorgio signed off on changing the ignition switch in 2006 and didn't change its part number, effectively hiding the change and making it harder for engineers to pinpoint the problem.

GM has reorganized its engineering department and named a new communications director and human resources chief. Two senior engineering executives have announced retirements that GM said weren't related to the recall.

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