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Ralph Nader on the General Motors Disaster and How to End ‘Cover-Your-Ass’ Corporate Culture

 Former presidential candidate Ralph Nader listens during a news conference July 2, 2012 at Public Citizen in Washington, DC. Nader held a news conference to announce an
Photo: Alex Wong/Getty Images

Slaughter on the highways has been a perennial phenomenon for nearly half a century, and still an industry is permitted to produce, unhindered, vehicles full of accidents and tragedies waiting to happen.” That was Ralph Nader, writing in The Nation, in October 1963. Another half a century later and here we are again, with General Motors CEO Mary Barra testifying in front of Congress this week about a faulty ignition switch linked to 13 deaths over the last decade.

Nader’s early work as a consumer advocate did make a huge dent, with the publication of his 1965 book, Unsafe at Any Speed, leading to the passage of the National Traffic and Motor Vehicle Safety Act. (Deaths on the road have been cut in half since.) But since February, GM has recalled 2.6 million cars, mostly Chevrolet Cobalts, whose ignition switches, when weighed down by a heavy key chain, could stall engines and stop airbags from working.

Now 80, Nader talked to Intelligencer about what has changed and what hasn’t in the auto industry since the ‘60s, and who should be punished for the cost culture that persists.

What do you make of the House and Senate hearings this week – is the government asserting its power in the most effective way?
After years of GM being outside the focus of the media, they’re now on the hot seat. If it’s something like the Ford Explorer/Firestone matter around 12 years ago, it could lead to some stronger amendments to the Motor Vehicle Safety law — strengthening the safety standards by legislative enactment and not waiting for the lengthy regulatory process. It would actually give deadlines. That’s what we’re hoping for.

And the sternness from the senators, is that just a performance?
It’s to imprint the seriousness of the matter on the top executive. That’s worthwhile right there. It’s very rare they get the CEO on the hot seat with all the media. It helps with the press and it helps convey the seriousness. If GM doesn’t start to shape up, there could be a second round.

GM CEO Mary Barra. Photo: Andrew Harrer/Bloomberg via Getty Images

Do you think this story is getting the coverage it deserves?
Yes, it looks like the reporters are competing against one another to get the latest scoop. It started out with a clear cover-up right at the beginning, over ten or 12 years. Then it has the first female CEO — that fascinates the press. How’s she going to handle it? It’s her first crisis. And then, it’s a very simple-to-understand defect. My key flips into accessory? And I can lose my engine power and disable my electrical systems and airbag? It’s not like some esoteric handling defect. So it connects right with the hand of the driver.

They’re telling me not to put anything else on the key ring?!

What can CEO Mary Barra actually get done?
She has a good opportunity now because nobody is going to fight her from downstairs. She’s got a penumbra of authority, in addition to her legal authority over the organization. She’s taking the heat and she’s met with the families. She can make some real changes inside GM. No. 1: She’s got to make accountable specific people inside GM that will be punished if they allow any cover-up, if they allow the cost culture to persist.

There are a lot of people being held accountable for keeping costs down — they don’t get bonuses or they get demoted if they don’t do that — but there is no one designated by name and position to keep casualties down.

What are her next steps?
I would suggest that she establishes an independent ombudsman, where conscientious engineers who have been muzzled by their cost-concerned bosses can go anonymously to the ombudsman, who has a direct line to the CEO and president of GM.

She can make that happen. Look what it’s costing them: It’s already at $750 million and growing. What’s it cost them in lost sales? All kinds of stuff spills out, even if it’s not directly related to the ignition switch. She knows that it’s just going to get worse and worse. There are going to be whistle-blowers, and plain envelopes, especially when the press sees prizes — they see Polk Awards, Pulitzers, and so on — once they get into that realm, there’s no stopping it.

This has all the elements. It’s a cocktail that gets it going. It is very difficult to get the press into that realm — take it from someone who knows from over the years.

Nader, 1970. Photo: CBS Photo Archive/Getty Images

How far have we come as a country that protects its consumers, from the Chevrolet Corvair in the ‘60s to the Cobalt today?
Everything is better. The cars are much safer. There’s a framework — it was nothing in the old days. They wouldn’t even recall the cars. Now, for example, there’s so much disclosure that it can feed the litigation. The plaintiffs’ lawyers are very important to keep the heat on and get internal documents and depositions out.

But the big thing was in the ‘60s. That’s when they were brought within a legal framework of regulation.

In 2005, someone at GM suggested a better ignition switch that would have cost 90 cents more —
That’s the cost culture!

Have we actually chipped away at that or have the companies just gotten better at hiding it?
They still have a cost culture, but now they have to calculate cost benefit. Is it going to cost more not to recall? Of course there are times when they drop the ball for a variety of bureaucratic and cover-your-ass reasons. That’s what’s operating here. The multilayered bureaucracy of GM — years ago, when I looked into this, there [were] 18 layers between the factory floor and the CEO. When you have that, you have instituted a culture of passing the buck.

Senator Claire McCaskill said GM has a “culture of cover-up … a culture that allowed an engineer at GM to lie under oath, repeatedly lie under oath.” How do we stop it?
Personal prosecutions. The Justice Department has this deferred prosecution for the corporations and they leave the officials free. That’s what they do in all these finance cases. What they’ve gotta do is find who was criminally negligent or who was willfully criminal. They have two options. You drive down the city and you are reckless and kill someone, you can go to jail. Not because you wanted to kill somebody, but because you were negligent.

It’s at least certain that there was negligence by X, Y, Z people. Is there willful negligence? There may well be that. Once you cover up, you tend to keep covering up. You saved 90 cents!

Senator Richard Blumenthal said, “I think it’s likely that G.M. will face prosecution.” What are the odds we actually see criminal charges here?
It could go into a settlement, they’ll spend a couple billion dollars, they don’t have plead guilty, and they’ll be on probation. The key thing is the people inside GM. If you want to make a bureaucracy accountable, you’ve gotta make bureaucrats accountable. I don’t see the Justice Department doing it unless the press keeps on ‘em. Then [GM employees] start ratting on each other and some ogre emerges.

I think it’s essential that be done. That’s the message that really counts — when they go to jail. Otherwise, it’s just the cost of doing business at the corporate level.

This interview has been condensed and edited.

Ralph Nader Interview: On General Motors