General Motors' (GM) Cruise autonomous vehicle unit has faced regulatory oversights and coverup concerns since October, with culture issues, ineptitude, and poor leadership, according to the findings of a third-party investigation.

The report, in part, deals with the controversy surrounding Cruise's robotaxi in San Francisco, where a pedestrian was dragged 20 feet by a Cruise robotaxi after being hit by another vehicle. The investigation results, published in a 105-page report on Thursday, examined whether Cruise representatives provided misleading information regarding the incident to investigators or the media.

Despite revealing widespread issues with company culture, the third-party investigation concluded that there is no evidence to suggest that Cruise leadership or personnel intended to deceive or mislead regulators during briefings a day after the accident, according to a summary released by Cruise.

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Alleged Misinformation

Former Cruise leaders and employees tried to present regulators with a video of the incident but faced difficulties in multiple initial meetings due to connection or "video transmission issues." Despite the initial intent to share the information, the report noted that Cruise representatives later failed to adequately inform some regulators or officials about all the details. When the video froze, literally and figuratively, the Cruise "employees froze at the moment, and no one thought to speak up and fill in the details," a person close to the investigation told CNBC. Some employees also neglected to revise or rectify company statements that left out this information and shifted the blame onto the human hit-and-run driver who initially hit the pedestrian.

Reasons for Cruise's Failings

The report details several occasions when then-CEO and co-founder Kyle Vogt, who resigned in late November, ultimately decided to withhold information, causing both regulators and the media to accuse Cruise of misleading them, saying, "The reasons for Cruise's failings in this instance are numerous: poor leadership, mistakes in judgment, lack of coordination, an 'us versus them' mentality with regulators, and a fundamental misapprehension of Cruise's obligations of accountability and transparency to the government and the public."

Quinn Emanuel Urquhart & Sullivan, the law firm retained by GM and Cruise for the three-month investigation, interviewed 88 Cruise employees and examined over 200,000 documents, which included emails, texts, Slack messages, and other records.

The inquiry was overseen by former federal prosecutor John Potter, a San Francisco-based partner, co-leading Quinn Emanuel's corporate investigations group, renowned for representing notable figures like Tesla CEO Elon Musk.

Cruise Accepts Report

Following the incident, local and federal governments initiated investigations. Cruise's robotaxi fleet was grounded and underwent significant leadership changes, with its co-founders, including Vogt, resigning and nine other leaders being removed. The company also laid off 24% of its workforce and a group of contractors.

In which GM holds about 80% ownership, Cruise said that it "accepts" the report's findings, will act on all recommendations, and fully cooperate with state and federal investigations into the October 2 accident.

The company mentioned on Thursday that investigations into the incident involve the California DMV, California Public Utilities Commission, National Highway Traffic Safety Administration, U.S. Department of Justice, and U.S. Securities and Exchange Commission.

According to the Quinn Emanuel findings, it was an incorrect approach for Cruise or any other business to assert that a video of an accident causing severe injury gives regulators all the necessary information and excuses them from fully informing regulators of all relevant facts.

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