Saturday, March 29, 2014

GM Recall Focuses on Executives without Carlyle Affiliation

Reuters reported:

When General Motors Co Chief Executive Mary Barra faces Congress next week she will have to explain how the top brass at the biggest U.S. automaker can say they knew nothing for more than a decade about a faulty ignition switch linked to crashes and at least 12 deaths.

GM's CEO "gets high marks for admitting wrongdoing. On the other hand, she hasn't been there very long," said Senate Commerce Committee Chairman Jay Rockefeller, a West Virginia Democrat, who is overseeing the Senate hearing.

The article mentioned former GM CEOs Rick Wagoner and Fritz Henderson, but omitted Barra's predecessor, Daniel Akerson.  Akerson left The Carlyle Group to head up GM for four years, recently returning to Carlyle as Vice Chairman and accepting a board seat at Lockheed Martin.  

"Why did these dots not get connected? Or worse, if they were connected, why did it take so long to do something?" said one former executive with experience in service matters, who asked not to be identified.

It's the PEU way, never admit error or responsibility.  Carlyle executives know how to keep their good name.

The senator said he would look at documents and listen to testimony before deciding about GM, and that the committee would be looking for explanations. "You have to have lessons," he said.
The lessons don't have to be the result of a competent investigation.  New Jersey Governor Chris Christie showed that just days ago.

An older version comes from the White House Lessons Learned report on Hurricane Katrina.  Author Frances Townsend omitted LifeCare, the Carlyle owned hospital chain, and their 25 deaths from Hurricane Katrina.  She made no mention of Memorial Hospital, where LifeCare rented a floor and the facility's total 35 deaths in Katrina's aftermath.

One year after the Bush White House gave Carlyle's LifeCare and Tenet a free pass, Jeb Bush was appointed to Tenet's board of directors.  There are lessons, some less obvious. Even Reuters may know who not to challenge.

OregonLive indicated Akerson should've been aware of the problem:

Cobalt owner Penny Brooks feels betrayed by GM and by the government. She bought a used 2005 Cobalt, with 40,000 miles on it, five years ago. Last year, her husband was driving about 60 mph when the engine suddenly stalled. They made it safely to the side of the road and took the car to a mechanic, who could find nothing wrong.

Since then, the car has stalled two more times when Brooks hit bumps in the road that caused the ignition to slip out of the run position. "Nobody should have to sit there and pray, 'Keep me safe until I get back home,'" said Brooks, a licensed cosmetologist from Kingsport, Tenn.

She filed a complaint on NHTSA's website last year and says she even wrote a letter to GM's then-CEO, Dan Akerson, but got no responses.

Welcome to my world Penny Brooks, where the stories grow more disturbing over time.  Townsend, Bush, Akerson are in the club.  We aren't.

Update 4-1-14:  Detroit Free Press reported: "Pressed for the first time publicly on whether her predecessor, CEO Dan Akerson, knew about the ignition switch defect, Barra responded: 'Not to my knowledge.'"

Update 4-4-14: Many aren't buying the free pass given former CEO Dan Akerson in this case.  Private equity mavens rarely talk about their real failures.  Sure, they'll throw in a red herring, one that is a PEU compliment in disguise.  I'd venture Akerson made it clear no negative news was to rise to his office.  Not acknowledging bad news is a classic PEU move.

Update 4-8-14:  Forbes picked up on this possibility with a story.  They referred to it as a "conspiracy theory."  The simple way to end such talk is have Akerson testify under oath.

Update 4-19-14:  Fortune ran a serious piece on this theme (nearly three weeks after PEUReport).

Update 7-23-14:  The AP reported "GM is conducting a company wide safety review as it tries to correct a dysfunctional corporate culture in which safety was a low priority."  Akerson was the most recent CEO of safety silent GM.