FORTUNE — The safety uproar engulfing General Motors Co. (GM) and its fledgling chief executive will test Mary Barra’s leadership chops, as well as the view that the new GM is a better company than the bankrupt GM that was bailed out by the U.S. in 2009.
Barra, who became CEO less than 60 days ago, asserted her personal responsibility for handling the crisis, which comes at critical time for GM as it fights to rebuild credibility with consumers, investors, and regulators. GM appears to have known for about a decade of a defective ignition that has cost motorists their lives, though only in the past month recalling vehicles that may be affected. The company said Wednesday the problem was known as early as 2001.
Unrevealed so far are the systems at GM (and the people involved) that failed to immediately address a potentially fatal defect. Also unclear is the extent of legal liability for the GM that filed for bankruptcy and that of the successor company that was incorporated in 2009.
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In an email to GM employees last week, Barra promised the automaker would cooperate fully with authorities and “other parties” with an interest in the recall. GM has undertaken “an internal review,” it said: “We will hold ourselves accountable and improve our processes so our customers don’t experience this again.”
Ford (F) and Toyota (TM) each have been the target of massive regulatory scrutiny and personal injury lawsuits in recent years following allegations that some of their vehicles were unsafe. In the case of Ford, Jacques Nasser, who was then chief executive, testified in 2000 before Congress; a year later he resigned from Ford. Toyota shook up its management ranks following allegations of unintended acceleration that were never proven conclusively.
Barra, by conspicuously shouldering responsibility, is exposing herself to heightened examination of her leadership fitness. Before being mentioned as a possible CEO candidate, she hadn’t been considered in line for the job. An electrical engineer by training, she has worked for GM her entire career, as did her father. On Jan. 15, she became the first woman to run an automaker.
If she performs well during this safety investigation, she could reinforce her leadership traits and authority, as well as galvanize GM’s management ranks, which face withering competitive and organizational challenges. GM still has much to prove to consumers who recall substandard vehicle models from pre-bankruptcy years. The company also must convince skeptical lenders and investors that it can grow profitably and avoid another financial collapse.
On Tuesday, the U.S. Justice Department said it has opened a criminal probe against GM in the Southern District of New York, wire services reported, without identifying the source of the disclosure. Though criminal charges aren’t a foregone conclusion, they raise the stakes for the automaker, which already is facing a broad government investigation into the way it handled the defective ignition in small-car models that has resulted in at least 13 deaths and 33 accidents.
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The Justice Department could be looking into possible liability under the Transportation Recall, Accountability, Enhancement, and Documentation Act, sometimes known as the TREAD Act. Passed in 2000 during the Ford/Firestone investigation, it was designed to punish automakers that knowingly fail to report defects that could endanger lives.
GM on Feb. 13 said it was recalling 780,000 Chevrolet Cobalts and Pontiac G3s built from 2005-2007. Two weeks later the automaker recalled 842,000 Saturn Ion, Chevrolet HHR, Pontiac Solstice, and Saturn Sky models. None of the vehicles in question are still manufactured. After consumer complaints began in 2004, GM learned that the ignition, under certain conditions, could slip from drive into accessory or shutoff mode, turning off the engine, locking the wheel, and disabling the airbag and other safety equipment.
Mary Barra’s honeymoon in office has been short and far from sweet. Her fiery baptism, on the other hand, could be lengthy.
