Barra defends GM's top lawyer

Written By kolimtiga on Kamis, 17 Juli 2014 | 23.50

Mary Barra, General Motors Co.'s chief executive officer, defended her general counsel as a man of integrity after a senator said he should've been fired for the company's poor handling of a fatally flawed ignition switch.

"I need the right team," Barra said, adding that the problems with the switch and the potential for punitive damages weren't brought to the general counsel's attention. "Mike Millikin is a man of tremendous integrity."

Senator Claire McCaskill, the Missouri Democrat, opened the fourth congressional hearing into GM's slow recall of fatally flawed ignition switches by saying the company should have dismissed its top lawyer. A culture of "lawyering up" as a defense against suits "killed innocent customers" of GM.

"How in the world, in the aftermath of this report, did Michael Millikin keep his job?" said McCaskill, who otherwise praised Barra for her efforts to fix the company. The senator told Barra that excusing Millikin's inaction represented a "blind spot," saying that Eric Shinseki wasn't told of long delays at Veterans Affairs hospitals, yet he was removed as secretary of the V.A. "He's gone."

Millikin appeared before the Senate panel today with Barra, as did Anton Valukas, the lawyer who led GM's internal investigation, and Rodney O'Neal, CEO of Delphi Automotive Plc. Kenneth Feinberg, who is administering a victim-compensation program, appeared separately.

GM has recalled almost 26 million cars in the U.S. so far this year, an annual record. The Detroit-based automaker has sped up the pace of recalls since February, when the company announced an ignition-switch defect that engineers had known about for years.

Even as Barra plays defense, the company's record recalls show no sign of depressing the automaker's vehicle sales or stock price. GM shares had risen 5.4 percent from Feb. 12, the day before it announced the recall that eventually covered 2.59 million small cars, through yesterday's close. GM shares fell 0.6 percent to $37.23 at 11:57 a.m. New York time.

In her prepared remarks, obtained by Bloomberg before today, Barra reiterated that the company's employees won't forget the lessons of the recall, and that they're working hard to address the underlying issues.

McCaskill, in her opening statement, praised Barra for stepping up with courageous leadership. While some see GM's large number of recalls as a problem, the senator called it a "good sign" that the company is doing right by its customers.

Barra's last trip to Congress came about a month ago before a House panel in which she faced sometimes hostile questions from representatives who questioned whether she has the ability to change the automaker's corporate culture.

That hearing took place after GM released the findings of a three-month internal investigation led by Valukas, a former U.S. attorney, that showed that engineers and lawyers knew about potentially faulty ignition switches in the Chevrolet Cobalt and other compact cars linked to at least 13 deaths for more than a decade while corrective action was stymied by a pattern of incompetence and neglect.

The ignition switch can inadvertently shut off when jarred, cutting power to the engine and deactivating air bags. The delay to recall the vehicles has led to investigations by the Transportation Department, both chambers of Congress and federal prosecutors.

Millikin said some of his staff failed the company in handling the ignition-switch defect. He apologized for how the recall was handled and said he will work to ensure such a failure never happens again.

"We had lawyers at GM who didn't do their jobs; didn't do what was expected of them," Millikin said in his statement. "Those lawyers are no longer with the company."

The Valukas investigation found that Millikin hadn't been informed of the lengthy review of the Cobalt switch until the recall decision was made in 2014 and that he was also unaware of litigation involving fatal accidents.

During the June 18 House hearing, Valukas told lawmakers that Delphi didn't give his investigators access to the supplier's witnesses and received limited response to requested records.

The parts behemoth, which was spun off from GM in 1997, is now domiciled in Kent, U.K., but retains extensive operations in Troy, Michigan, a Detroit suburb. Delphi, which manufactured the faulty ignition switch to GM's specifications, has been mostly silent as the recall became a full-fledged scandal for GM, which was fined a record $35 million by the Transportation Department.

Senator Richard Blumenthal pressed Feinberg on whether the victim-compensation fund could be broadened to include other victims of ignition-switch defects beyond the 2.59 million small cars. GM's recall of millions of other vehicles for faulty ignitions, including some Chevrolet Impalas, shows there are more owners who suffered, the Connecticut Democrat said.

GM's lawyers failed the company and the public, Blumenthal said. He predicted a criminal investigation being carried out by the Justice Department would find culpability.

"Lawyers are typically supposed to be the ones who make sure corporations comply with the law in spirit and letter," Blumenthal said. "Here the lawyers for GM actually enabled cover-up, concealment, deceit and even fraud."

Feinberg said he didn't know enough about the fact of the case to have an opinion on GM's lawyers. He said the parameters of the compensation plan were set by GM.

Copyright © 2014, Los Angeles Times

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