That great, big, all-American motor car company that the Obama Administration took bows for saving five years ago has been revealed as a thoroughly corrupt, incompetent and deadly enterprise. As the full extent of the General Motors safety scandal unfolds—and it could get worse—this is a good time to take stock of the ethics lessons and miscreants involved, on the off chance that we are interested in learning something.
Did that sound bitter? It is. There is little in this terrible story of corporate ineptitude and corruption that wasn’t known and understood decades ago. Yet here we are again.
- G.M. management. It pursued the policy of paying large settlements with confidentiality agreements to those injured by ignition switch defects in their cars, never fixing the defect itself. This is the old Pinto calculation, reasoning that if it is cheaper to pay for the deaths and injuries from a design defect than to fix the defect itself, then it makes good business sense to keep doing that, indefinitely. There are three problems with this logic, of course. First, it kills people. Second, it is stupid: eventually the facts will get out, and the whole company will be endangered. Third, it is wrong.
- The plaintiffs’ attorneys. The trial lawyers association, way back when I worked for it two decades ago, adopted the unofficial position that the practice of accepting settlements from large corporations in product liability cases that included agreements not to reveal the damages and the defects involved to regulators, the news media, and endangered consumers was unethical. Members were urged to make a rejection of such terms a condition of agreeing to represent injured parties. Speeches were given, pledges were made. All agreed that the practice undermined the mission of the plaintiffs’ bar to make America safer through the civil justice system. What happened? Greed, that’s what. Just as every plaintiff has a price, so do many trial attorneys, who received up to 40% of those secret settlements. Every single one of the lawyers who guided their clients to accepting hush money in exchange for letting unsuspecting owners of G.M. cars risk their lives and those of their families were members of the American Association for Justice, which changed its name from the Association of Trial Lawyers of America because a survey showed the term “trial lawyers” was too negative. This is why the term is negative.
- The secret settlement recipients. These were parties who had been injured by an automobile design defect, and knowingly accepted money to allow General Motors to continue selling potentially deadly cars to unsuspecting consumers just like them. Those with ethical lawyers had this explained to them, as well as why joining in a conspiracy to keep the defects secret was irresponsible, cruel, and wrong. Yet everybody took the money. You can list the rationalizations as easily as I can: “I have to think of my family,” “They would do the same if they were in my position,” “This isn’t my fault.” Garbage. Blood is on their hands.
- Complicit judges. They agreed to seal G.M.’s secret settlements as a matter of course. They didn’t have to. They are supposed to act in the public’s interest, not the interests of venal plaintiffs and amoral companies. “Concealment can kill, and so can secret settlements,” said Senator Richard Blumenthal (D-Del), who is trying to get a law passed that would force judges to refuse requests to seal settlements like these. “By sealing court records of lawsuit settlements that show serious safety defects, judges are aiding and abetting more deaths, injuries and danger.” Correct. But we shouldn’t need a law to tell judges they shouldn’t help companies kill Americans for profit.
- The American Bar Association. It has not only done nothing to stop confidentiality agreements, knowing full well the damage they do, it has lobbied to block legislation making secret settlements illegal. Why? See: 40% cut of settlement money referenced above. Of course, the official ABA line is that blocking such deals would make settlements harder to agree upon, thus over-burdening the court system.
- Mary Barra, G.M.’s CEO. Her appointment as CEO at the beginning of 2014 was heralded far and wide as an epochal crash through the glass ceiling. She oversaw this mess. The defense offered by her supporters will be that she was too new to the job to be blamed for the scandal. Nonsense. She started working for General Motors at the age of 18, held a variety of engineering and administrative positions as she worked her way up the corporate ladder, and is steeped in G.M.’s flawed culture. In 2008 she became Vice President of Global Manufacturing Engineering’ in 2009, Vice President of Global Human Resources; in 2011, she advanced to become Executive Vice President of Global Product Development, which included responsibilities for design. Do you really think she had no idea what was going on?
G.M. has been using secret settlements for years. Barra knew the history, if she wasn’t directly complicit in them, and she well may have been. There was a scandal ten years ago when it was revealed that G.M. had been secretly settling cases involving exploding side-mounted gas tanks at the same time it was denying that those cars were unsafe. As Richard Painter points out at the Legal Ethics Forum, Barra, “as CEO of a company that stresses safety as a top priority has [an]obligation to ask thorough questions about such matters, not simply wait until others do or do not report problems to her.” He says she should resign or be fired. He’s correct.
- G.M. General Counsel Michael P. Millikin. If he didn’t engineer the unethical settlements policy, or wasn’t actively involved in a cover-up, then he was negligent in learning what was going on in the company. Painter: “G.M.’s General Counsel had a duty to ask about — and find out about — both serious safety problems with G.M.’cars and litigation against G.M. over car safety. There is no way he could have represented the company in its disclosure to shareholders, or in connection with car safety issues, without affirmatively seeking out this information. He apparently did not do so. On top of this, we have now learned about millions of dollars of “secret settlements” that were so secret that the … General Counsel of GM did not even know about them. That was probably because [he] did not want to know, or did not care whether they knew about such settlements … That alone is unacceptable.”
- The Obama Administration. Steven Rattner, former head of Obama’s Automotive Task Force, now says that G.M.’s “nod and salute” culture was in evidence from the beginning…as in when the government was preparing to bail it out of problems of the company’s own making. There was a reason why General Motors was heading for bankruptcy, and the Obama administration defied basic market principles by artificially, at taxpayer expense, propping up an entity with a toxic culture that the market had already rejected. Good plan! Now innocent people are dead, taxpayers are out over ten billion dollars, and General Motors may be headed to bankruptcy anyway….and deserves it. But this fiasco saved a lot of Democrat-voting union members, so it all worked out for the best….or so MSNBC will soon explain to us.
More passengers are sure to be boarding soon. For example, even though their fiduciary duties obligate them to sack Barra, I doubt that the General Motors stockholders will have the integrity or courage to do so. After all, she’s a trailblazer! What a downer it would be for the women who finally grabbed one of corporate America’s great power posts to be officially deemed incompetent and corrupt, and have to be removed after less than a year on the job! War on women!
Why, it would be like impeaching the first black President for repeatedly and openly violating the Constitution, engaging in multiple cover-ups, killing U.S. citizens via drone without due process, lying to the American people, releasing terrorists without consulting Congress, and allowing the I.R.S. to target political opponents, as Richard Nixon did.
Everybody knows you can’t do that.