GM suspends 2 engineers amid ignition-switch investigation

Gary Altman, left, and Ray DeGiorgio, were suspended with pay, sources told Bloomberg.

UPDATED: 4/10/14 1:22 pm ET - adds details on DeGiorgio

DETROIT (Bloomberg) -- General Motors has placed two engineers, Ray DeGiorgio and Gary Altman, on paid leave for their roles leading to the recall of 2.6 million small cars with defective ignition switches tied to at least 13 deaths, two people familiar with the matter told Bloomberg.

CEO Mary Barra said in a statement that two engineers had been placed on leave following a briefing from Anton Valukas, the former U.S. attorney overseeing an independent investigation into circumstances leading to the recall. The statement didn’t name the engineers. A GM spokesman declined to comment further on the matter.

“This is an interim step as we seek the truth about what happened,” Barra said. “It was a difficult decision, but I believe it is best for GM.”

Barra has been under increasing pressure to act decisively as facts of the matter emerge. U.S. Sen. Claire McCaskill, D-Mo., said in a hearing last week that she couldn’t understand why DeGiorgio hadn’t been fired.

DeGiorgio and Altman emerged at the center of U.S. Congressional hearings last week in which Barra said it appeared that DeGiorgio had lied under oath during a 2013 deposition in a case brought by the family of a crash victim.

“The data that’s been put in front of me indicates that,” Barra said. He remained employed by GM, she said.

DeGiorgio approved a design change in 2006 that improved the spring in the faulty ignition switch and made it more robust, authorizing its production without fully documenting the decision, according to a letter sent to Barra last week by Democrats on the House Energy and Commerce Committee.

McCaskill during the Senate hearing held up a copy of a document signed by DeGiorgio purportedly showing that he authorized a redesign of the faulty switch on April 26, 2006. She said DeGiorgio lied.

“It’s about time," McCaskill said in a statement today. "Of the many frustrating moments in our hearing last week, an especially surreal one was learning that the GM employee who had obviously committed perjury hadn’t even been suspended and was still on the job in a role with a direct impact on the safety of GM’s products.

"This marks a small step in the right direction for GM to take responsibility for poor -- and possibly criminal -- decisions that cost lives and put millions of American consumers at risk.”

U.S. Sen. Claire McCaskill, D-Mo., holds a copy of a General Motors document signed by GM engineer Ray DeGiorgio that purportedly showed that DeGiorgio authorized a redesign of the faulty ignition switch. The form, three former GM engineers say, would not have authorized a redesign. Photo credit: BLOOMBERG

Last week's allegations heightened scrutiny of DeGiorgio, who at the time was the lead design engineer on Cobalt ignition switches. In a deposition taken in early 2013 in a wrongful-death suit against GM in Georgia, DeGiorgio testified that he hadn’t been aware that GM had made any change to the part.

“This information raises important new questions about what GM knew, when GM knew about the risks from this faulty ignition switch, and how the company has handled the recalls of affected vehicles,” wrote the representatives, Henry Waxman of California, Diana DeGette of Colorado and Jan Schakowsky of Illinois.

Test driving Cobalt

Altman, who was engineering manager of the Cobalt program, oversaw several inquiries into reports of the car stalling, including a time in October 2004 when he test-drove a Cobalt and accidentally turned off the engine by bumping the ignition with his knee.

After engineers proposed several solutions to the problem, Altman ordered one of the inquiries closed with no action, concluding that none of the proposals represented “an acceptable business case,” according to a lawsuit filed last month in San Francisco federal court.

Members of Congress last week questioned Barra about the “acceptable business case” comment, attributing it to a GM document, without identifying the engineer.

No comment

The carmaker declined to make DeGiorgio or Altman available for comment.

DeGiorgio, who turns 61 this month, has made no public statements. Blinds were drawn this week at his two-story house in suburban Detroit. A telephone associated with DeGiorgio was answered this week by a man who identified himself as Ray. He declined to speak to a reporter or say whether he had a lawyer. A subsequent call to the number went to a voice mail saying that DeGiorgio was “currently away from the office.”

DeGiorgio graduated in December 1977 with a bachelor of fine arts degree from Eastern Michigan University in Ypsilanti, according to a school spokeswoman. He joined GM in mid-1991, just after earning a mechanical engineering degree from Lawrence Technological University in Southfield, Mich., he said in a deposition taken for a wrongful death suit against GM.

He worked at GM’s sprawling technical center in Warren, Mich., the cradle of GM innovation for a half-century. Among the campus’s 20,000 workers are engineers who collaborated with NASA to build a robotic space arm, and designers who jostled for the chance to shape the latest Chevrolet Corvette.

Saturn Ion

DeGiorgio’s job, in 1999, was to lead a team designing an ignition switch for GM’s next generation of small cars. The Cobalt ignition switch, which was also used in the Saturn Ion, was among the first ones he designed, he said in the deposition.

The team consisted of DeGiorgio, suppliers, project engineers and validation engineers, he said.

As early as 2001, GM engineers noticed the switch could unexpectedly shut off, the company has said. By 2005, several engineers were aware that it could be inadvertently turned, shutting down a moving car’s engine and cutting power to its steering, brakes and airbags. The fault was also cited in newspaper reviews of the 2005 Cobalt. In July of 2005, a Cobalt with the ignition in accessory mode hit a tree in Maryland. The airbags failed to deploy, and the driver died.

That September, a GM manager, John Hendler, sent an e-mail to 16 colleagues -- including DeGiorgio -- that weighed a plan to fix the “inadvertent ignition offs” issue.

In the e-mail, which GM provided to lawmakers, Hendler wrote that it would cost too much -- 90 cents per piece and $400,000 in production equipment changes -- to add enough capacity to put a new switch to 500,000 small sedans, including the 2008 Cobalt. The warranty savings from the changes was only 10 cents to 15 cents per part. Hendler’s report says the team opted to keep the existing switch and look at changing it in the 2009 model year.

“I’m not sure it’s OK to wait,” wrote another GM manager, Lori Queen. GM declined to make Hendler available for comment. Queen has declined to comment.

DeGiorgio forwarded the e-mail to another colleague, writing: “It’s not over yet.”

GM opened an engineering inquiry into the Cobalt ignition switch in November 2004, after customers complained the engine “can be keyed off with knee while driving,” according to a problem-tracking document obtained by House investigators. Four months later, the engineering manager for the Cobalt rejected the change, citing parts costs and long lead times.

DeGiorgio order

“None of the solutions presents an acceptable business case,” the manager said, according to a GM memo cited by the House committee that didn’t identify the writer. Altman testified in a lawsuit last year he was the Cobalt engineering manager until May 2005.

The following year, 2006, DeGiorgio signed an order with Delphi Mechatronics Systems, the switch’s manufacturer, to upgrade the switch, Part No. 10392423, by adding a longer and tighter spring, according to another document provided by GM.

The redesigned part was assigned the same number. That is unusual, according to auto-safety experts, because the automaker, as well as dealers, repair shops and auto-parts stores, would have no way to tell the updated part from the old.

“It’s pretty much standard procedure to make a part number change when they change the part like they did,” said Pat Donahue, a private engineering consultant who worked at GM for almost two decades until 2001. Typically, he said, such a change would also require authorization from a manager. DeGiorgio was the only person listed on his request.

Claudia Tapia, a Delphi spokeswoman, declined to comment.

New switch

The new switch began making its way into 2007 Cobalts and Saturn Ions, according to a timeline GM provided to regulators. By 2012, GM knew a switch flaw was causing some Cobalts and other models to stall and prevent airbags from deploying, according to Lance Cooper, the Georgia lawyer who deposed DeGiorgio and several other GM engineers as part of the wrongful death suit against the automaker.

Yet GM’s inhouse investigators, who had been looking into the flaw for two years, couldn’t figure out why it wasn’t showing up in later models, Cooper said.

In part, that was because DeGiorgio didn’t tell the investigators he had ordered the redesigned part without assigning it a new number, Cooper said last week in an interview at his office in Marietta.

'Switch guy'

Instead, DeGiorgio told the investigators, including Brian Stouffer, that he would try to figure out what was wrong, Cooper said, citing October 2012 e-mails between DeGiorgio and the investigators.

“Stouffer is saying, ‘You’re the switch guy. If we’re going to change it, give me some proposals for how to change it,’” Cooper said, citing the e-mails.

“DeGiorgio says, ‘What do you want in terms of torque?’” Cooper said, citing the e-mails. “Stouffer is going to DeGiorgio saying, ‘Hey, I need you to design me a new switch with a higher torque level.’ But it had already been designed -- it was in the replacement switches,” Cooper said.

DeGiorgio told Cooper much the same in a five-hour depostion last April at the Westin Hotel at Detroit’s airport.

More than three hours in, Cooper showed DeGiorgio an exhibit of the faulty ignition switch, as well as a replacement part with a longer spring in the so-called detent plunger.

DeGiorgio deposition

“Do you see the difference?” Cooper asked.

“Yes,” DeGiorgio said.

“Have you noticed that before today?”

“No, sir,” DeGiorgio responded.

Cooper repeated his question. DeGiorgio repeated his denial and said he didn’t authorize Delphi to change the switch.

“We certainly did not approve a detent plunger design change,” DeGiorgio said. Asked if suppliers would only make such a change with GM approval, he responded: “That is correct.”

It wasn’t until October 29, 2013 -- six months after DeGiorgio’s deposition -- that GM’s defect investigators received a copy of the document from Delphi, bearing DeGiorgio’s name, showing the switch had been changed in 2006, according to GM’s timeline.

It was this point that brought the greatest scorn from McCaskill in last week’s testimony. How, the senator asked, could GM lawyers who were present at their engineers’ depositions not flag the issue to their superiors?

“If I’m a lawyer and I’m at a deposition where this bombshell has been dropped on my client -- that there are two different parts with the same number, one of which is defective -- I guarantee you I don’t go back and tell the folks at the law firm,” McCaskill said. “I’m on my cellphone in the lobby saying to General Motors, ‘We’ve got a problem.’”

How, the senator asked, could this have gone on for months without the knowledge of GM executives?

“That is part of the investigation,” Barra responded.

New program

Also today, GM said it created a program to recognize employees for ideas that make vehicles safer and for speaking up when they see something that could affect customer safety, according to the website. Barra had previously created a vice president for vehicle safety position as part of her plan to avoid delays to future recalls.

Barra announced the Speak Up for Safety campaign at an employee town hall meeting today, GM said. The aim is to remove real and perceived barriers to candid conversations between employees and their leaders to foster a “safety first” culture.

“GM must embrace a culture where safety and quality come first,” Barra said in the statement. “GM employees should raise safety concerns quickly and forcefully, and be recognized for doing so.”

Nick Bunkley and Automotive News staff contributed to this report.

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