GM Recall: the Valukas Report – What It Is (and What It Isn’t)

The “Valukas Report,” otherwise known as “Report to Board of Directors of General Motors Company Regarding Ignition Switch Recalls,” is a 325-page document (including the Table of Contents), with 1,356 footnotes and seven appendices.  It has been mentioned fairly frequently on the news and in Congressional hearings. As I wrote previously, I have read the whole thing and would like to tell you about it.

I started by giving you a “cast of characters,” a cursory who’s who of this saga. But before we dive into all the gory details (and there are a lot), let’s start with the basics. What is the Valukas report? What is it not? Does it matter? Do we care?

Read on.

Anton Valukas is an attorney; he used to be a United States Attorney (federal prosecutor) and now chairs Jenner & Block, a nationwide law firm of over 450 attorneys. He was hired by the board of General Motors in the wake of the ignition switch recall, when GM’s leadership realized in early 2014 that, for nearly ten years, some of its vehicles contained a defective part that was apparently resulting in fatalities. Under pressure from Congress and the National Highway Traffic Safety Administration, Mary Barra, GM’s CEO since Jan. 15, 2014, directed Valukas to conduct a no-holds-barred investigation into the defective ignition switch, including who knew what when, and to make recommendations for the company moving forward.

Valukas, and a formidable army of Jenner & Block attorneys, interviewed dozens of current and former GM employees, suppliers and other third parties, and reviewed millions of pages of documents. The Valukas Report is the result.

The report describes in detail the process by which the defective ignition switch was designed and approved, how it slipped through the cracks for a time, how GM’s own engineers and investigators failed to identify the full problem, and how GM’s management responded (or failed to). There are plot twists worthy of John Grisham, though – if you believe Valukas – ultimately no “conspiracy,” just an unbelievable amount of incompetence and a number of bad choices.

This doesn’t surprise me. To all you general conspiracy theorists, when it comes to government and big business, consider: my definition of conspiracy is a group of people working in concerted action toward a common (nefarious) goal. Now try applying that to government or corporations. NOPE! You people are giving those dumb bunnies waaaay too much credit.

But I digress.

The Valukas Report is the result of an extensive (if short) investigation into GM’s underwear drawer. It tells a detailed story of a particular years-long episode in GM’s history. It judges – throughout, you can almost hear Valukas shaking his head (his Facebook status would be “Oh brother, GM. SMH.”). The final section contains several broad suggestions for how to prevent such failings in the future.

That’s what it is. What it is not is a binding document, at least not technically. It is not a jury verdict or a court judgment. It doesn’t require GM to do anything. It is merely an advisory report to GM’s board. However, by making the report public, GM has, as a practical matter, given it the effect of a judgment in the court of public opinion. The Valukas Report will guide Congress (and countless attorneys, including at the Department of Justice) as it considers policy changes and assesses liability and punishment. In that sense, the Valukas Report is about as binding as you can get.

We care (or should), because rarely is a company of GM’s size and magnitude laid bare before the public. The Valukas Report provides us with a unique opportunity to see behind the curtain, and to become better-informed consumers and tax-paying voters. It also serves as a pretty powerful cautionary tale – not just for businesses, but for all of us – on the follies of cutting corners, not being curious where appropriate, etc. GM may be a gigantic corporation, but this debacle was caused by people. By the bad choices of one person, then another, then the blindness of others. There is no guarantee we will not end up in situations with similar opportunities to screw up on a massive scale. The Valukas Report suggests, in painful detail, why that would not be advisable.

The Valukas Report is available HERE through the New York Times, where you can download it or read it online.

Up next: how the ignition switch was defective.

See Part One of the GM Recall series: Cast of Characters