Delphi (DLPH) CEO O'Neal says ignition switch problem is GM's fault

The CEO of Delphi, the manufacturer of defective ignition switches, said General Motors is the one to blame for the ignition problem responsible for at least 13 deaths. During the her fourth Congressional hearing, GM CEO Mary Barra said the automaker is doing everything it can to correct the the problem and compensate victims.

Gary Cameron/Reuters
General Motors general counsel Michael Millikin (L-R), Chief Executive Mary Barra, Delphi Automotive Chief Executive Rodney O'Neal and attorney Anton Valukas testify before the Senate Commerce, Science and Transportation Subcommittee in Washington July 17, 2014. GM's legal department came under fire in the Senate hearing on Thursday, as lawmakers questioned why the automaker took more than 10 years to recall cars with ignition switch flaws while its lawyers worked on numerous cases involving deaths or injury caused by the malfunctioning switch.

The manufacturer of the switch at the center of GM's ignition switch debacle is placing the blame squarely on GM. 

During a hearing in front of Congress Thursday, the chief executive of Dephi Automotive (DLPH), the auto supplier that supplied defective ignition switches, said that General Motors (GM) is to blame for approving the faulty part design. 

During his testimony to lawmakers, Delphi CEO Rodney O'Neal said his company made "the switch that GM approved and wanted," according to Reuters. The faulty ignition switches are attributed to 13 deaths and 54 crashes. The ignition switch can slip from the "run" to "accessory" setting, which causes the engine to stall, the air bags not to deploy, and loss of power brakes and power steering.

"GM knowingly approved a final design that included less torque than the original target," he said to members of a Senate subcommittee. "In our view, that approval established the final specification." Delphi has shipped more than 1 million new switches to replace the faulty parts that GM recalled.

Members of Congress also grilled  GM CEO Mary Barra for the fourth time. During the hearing, Barra  tried  to set a clear line as to how much the company is willing to do and not do in responding to the controversy. Ms. Barra said GM will not extend its compensation program for victims and added that the company will not share any more documents from the internal investigation. However, Barra said GM wouldn't waive its protection from lawsuits, which was an option because of the company's bankruptcy reorganization. 

“We are going to fix our mistakes and we are going to be a better, stronger company,” Barra said.

But lawmakers didn't think Barra's answers went far enough.

“You’ve provided answers that, I think, for me are unsatisfactory,” Senator Richard Blumenthal, Democrat of Connecticut, said. 

By the end of June GM had recalled 29 million cars in North America – more than the auto industry has recalled annually during any of the past nine years. To compensate victims, GM has set up a compensation program run by attorney Kenneth Feinberg. So far, the automaker has set aside $2.5 billion to pay for recall cost. That number doesn't include the cost of compensating victims. Mr. Feinberg said at Thursday's hearing the company has no limits to the amount GM will pay to victims.

Barra wasn't the only GM employee in the hot seat. GM general counsel Michael P. Millikin, who has worked at GM for 37 years, was questioned by lawmakers about how GM's lawyers failed to inform him that lawsuits about the deaths allegedly caused by the defective switches were likely. Many lawmakers have called for Mr. Millikin to be dismissed from the company.

“It is clear that the culture of lawyering up and Whac-a-Mole to minimize liabilities in individual lawsuits killed customers of General Motors,” said Senator Claire McCaskill, Democrat of Missouri and chairwoman of the subcommittee.

“Lawyers have consistently brought safety concerns to my attention, including some of the lawyers who were let go,” Mr. Millikin said. “For some reason that did not happen here.”

As about a dozen families of accident victims watched the hearing, Barra agreed with lawmakers that GM needed to make dramatic changes to its safety procedures.

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