Congress Vs. GM: ‘Why Not Jail’ Squares Off Against K Street | Commentary

Posted July 30, 2014 at 1:17pm

GM CEO Mary Barra has appeared before congressional committees no fewer than four times in the past few months to testify about her company’s deadly ignition switch problem, emerging gradually from her initial persona as a mournful penitent to a posture of straight-backed, jaw-locked defiance during questioning by Sen. Claire McCaskill, D-Mo., in mid-July.

McCaskill’s outrage is vintage, exemplifying a bipartisan congressional approach to the automaker, which steadfastly ignored growing evidence that the ignition switch used in Cobalts, Opels, Pontiacs, and Saturns had such a hair trigger that until 2005, it shut the engine down when brushed lightly by the driver’s hand or knee. Air bags were disabled and power steering disappeared. The resulting loss of control caused at least 13 fatal accidents. Apart from providing good TV for insomniac devotees of C-SPAN, the saga frames real questions: Will Congress put its legislative power where its irate oversight is? And will the Obama administration launch criminal cases against those at fault?

The most promising sign of legislative determination is a bill introduced by Sens. Richard Blumenthal, D-Conn., and Edward J. Markey, D-Mass., and Rep. John Conyers Jr., D-Mich., that would make it a felony to fail to warn customers about such defects. The “Hide No Harm Act” includes a definition of the “responsible corporate officer” against whom such cases could be brought, clarifying an existing legal doctrine by saying higher-level executives have the “responsibility and authority, by reason of his or her position in the business entity  . . .  to acquire knowledge of any serious danger.” The key is that the person could or should have known, not that he or she admits to having known.

To their credit, McCaskill, Blumenthal and Markey have been unimpressed by the intricately executed apologize-then-stonewall two-step, pointing out the embarrassing truth that problems endemic to the corporate structure at GM, as opposed to the frantic cover-up executed by one rogue employee, caused repeated car wrecks in older models long after the defect was fixed. And, indeed, an internal GM report produced by Anton Valukas, which reads as if it was intended to shield Barra and other top deputies, includes revelations that: (1) GM engineers knew the ignition switch could pose problems in 2002, two years before the Cobalt was introduced to the market; (2) Barra has described the lethargic, stifle-all-bad-news culture at the company as the “GM nod”; and (3) the legal department settled fatality cases demonstrating the defect without ever pushing for a recall. “Throughout the entire 11-year odyssey, there was no demonstrated sense of urgency,” Valukas writes, “right to the very end.”

The Department of Justice is undoubtedly negotiating fervently with company lawyers to reach a corporate settlement. But the prospect of allowing GM to buy its way out of having caused at least 13 deaths without even admitting criminal liability, casts a shadow over the proceedings. Why should the responsible parties at GM escape prosecution because the corporate “person” that employs them can afford to pay a hefty monetary penalty, giving federal prosecutors brief bragging rights without deterring other bad actors? Why not jail is now the most pressing question.

Rena Steinzor is the president of the Center for Progressive Reform and a law professor at the University of Maryland Carey School of Law.