March 25, 2014

Back in 1980, I bought what I thought was my dream car. It was an all-wheel, sporty – ok, sporty at the time – front-wheel-drive vehicle called the Chevrolet Citation, which General Motors heavily promoted as “The first Chevy of the 80s” and Motor Trend magazine named its “Car of the Year.” My generation was raised to believe that “What’s good for General Motors is good for America,” so there was also a sense of patriotism and civic duty at play behind my choice…even if I was a Canadian. After all, thanks to the countries’ trade agreements, what was good for America was also good for Canada!

The Citation was released with great fanfare, but the glory didn’t last. You see, the car was a bit of a deathtrap. There were a host of mechanical issues, most notably a frequent rear brake lock-up that would cause spin-outs in sudden stops or on wet roads.  GM was accused of covering up the problems and the Justice Department charged that the automaker repeatedly lied to government investigators. I still have flashbacks to those terror-filled days when driving on rain-slicked roads.

When I traded in my Citation, I vowed I’d never again buy a GM car. Call me crazy, but I figured it best not to trust a car company with a demonstrated pattern of willfully selling vehicles that could kill people. GM was also the company behind the Chevrolet Corvair, which consumer advocate Ralph Nader labeled a “One-Car-Accident” in his famous book “Unsafe at Any Speed.”

Today, the evidence is quickly mounting that my instinctual distrust of GM all these years was very well placed. The company last month recalled 1.6 million Chevrolet Cobalts and other small vehicles because of a potentially fatal ignition switch defect that put hundreds of thousands of owners at considerable crash risk. Numerous crashes and more than a dozen fatalities are being blamed on the defect. The New York Times reports that GM conclusively knew about the defect more than four years ago but continued to take active measures to deny the problem; Automotive News weighed in with a recall-related shady practices story of its own.

According to the Times, GM had a pattern of intimidating plaintiffs and their attorneys who dared to file wrongful-death lawsuits after a family member had been killed driving a Cobalt. William Jordan, a South Carolina attorney who filed a Cobalt wrongful death suit, said GM threatened to file sanctions and seek attorneys fees if he didn’t withdraw his lawsuit. Intimidation tactics are also part of GM’s tortured history: the company conducted an aggressive campaign of harassment and intimidation against Ralph Nader that ultimately resulted in former GM President James Roche apologizing on behalf of the company before a Senate Committee. (Nader successfully sued for excessive invasion of privacy.)

Mary Barra, GM’s recently appointed CEO, has said that she doesn’t know why a recall wasn’t ordered, but maintains she is committed to finding out the truth as to what happened. As I read her comment, my mind immediately jumped to the memorable scene in the movie “A Few Good Men,” when a character played by Jack Nicholson is urged to come clean and tell the truth. “You can’t handle the truth!,” the Nicholson character retorted in one of the best scenes in recent cinematic history.  Barra might be wise to heed that message.

There is evidence that she possibly has. Barra’s retention of two white shoe law firms to conduct an “unvarnished” inquiry certainly doesn’t inspire trust or confidence.  Law firms are well suited to conduct inquiries as to how a company complied with the law, but not to measure prevailing moral and ethical standards that employees are expected to follow. As I’ve written before, many companies allow their attorneys to engage in questionable practices that ultimately hurt their brands and reputation. If Barra truly wanted an unvarnished investigation, she would have appointed a panel of experts from a multitude of disciplines.  James McGrath, a principal at the Cleveland law firm, told the Times the advantage of having a law firm investigate a scandal is that “there is a great incentive to ferret out information so they can spin it.”

Barra’s selection of the law firms King & Spalding and Jenner & Block to conduct the inquiry is also dubious. King & Spalding has ample reason to “spin” the information it uncovers: it was one of the law firms that GM used to defend against the Cobalt wrongful dismissal suits, so it’s hardly a disinterested party.  Jenner & Block is also involved in a high-profile investigation that some charge is an inherent conflict.

GM ultimately will survive its latest crisis. Sadly, it seems we have become so inured to government and corporate wrongdoing that such behavior is considered de rigueur, no longer sparking much more than a fleeting moment of outrage. In the absence of such well-overdue and much-needed public outcry – such as the one that emerged after Nader published his book – political leaders and certain broadcast media pundits will inevitably step in and whitewash GM’s latest reported misdeeds, ultimately championing the company as “too big to fail” and one of the nation’s vital “job creators.”  And these apologists will go on maintaining that what’s good for General Motors is good for America – despite the staggering evidence to the contrary.