Barra Is Protecting GM Top Lawyer Millikin — But Should She Be? – Forbes

Posted: Monday, July 21, 2014

Mary Barra may have developed a blind spot with her resolute defense of General Motors’ General Motors’ chief legal counsel in the wake of Michael Millikin’s suspect role in the company’s handling of safety recalls as GM’s approach became sclerotic and even irresponsible over the years.

That’s the view of some expert observers with legal and GM backgrounds. They believe Barra should be nudging Millikin to fall on his sword — into resignation or “retirement” — instead of stoutly defending a performance by her 65-year-old chief counsel that, at best, suggested awful things happening on his watch and, at worst, may have made him at least negligent  in some of the most inexcusable aspects of the company’s continuing recall crisis.

“I definitely would push Millikin on his sword” if he were Barra, Ayall Schanzer, CEO of Friedland Realty Advisors in New York, and a lawyer who has operated in the financial-services sector in the city for many years, told me. “It would be a way to show both Congress and the marketplace that you’re really serious about changing the culture.”

Michael Millikin and Mary Barra on Capitol Hill.

Michael Millikin and Mary Barra on Capitol Hill.

Said another top attorney, one with decades of experience with General Motors: Millikin “ought to offer his resignation. His continued employment as general counsel is a distraction. And GM ought to bring in a big-name attorney from outside to replace him.”

Barra prompted such reactions with a stance she took in the fourth round of increasingly antagonistic questioning of her and other GM executives in Washington, D.C., this time by a bipartisan U.S. Senate panel that was critical of aspects of her handling of the safety-recall debacle.

In the corporate realm, GM’s CEO has drawn broad praise for her decisive, forthright and even somewhat transparent handling of the crisis, especially in the several significant moves she has made to open up the company’s culture and processes and to avoid such problems in the future.

But lawmakers last week focused on the fact that, while GM dismissed several top lawyers and other senior managers after the company’s own investigation of its safety-recall culture, Millikin wasn’t among them.

In testimony, Millikin said that he didn’t know until February about the ignition-switch defect now linked to at least 13 deaths in Chevrolet Cobalts, Saturn Ions and other cars built several years ago. Barra defended the 37-year GM veteran, seated next to her, as “a man of incredibly high integrity. He’s the person I need on this team.”

GM’s earlier report on its internal investigation said that members of Millikin’s staff were warned repeatedly starting in 2010 that GM could face big punitive-damage awards over its failure to address the defect adequately, but it said that the amounts of the settlements involved were too low to require Millikin’s review.

But Sen. Claire McCaskill (D., Mo.) was among panel members who were incredulous that Millikin wasn’t blamed anyway. “How in the world, in the aftermath of this report, did Michael Millikin keep his job?” she asked. “This is either gross negligence or gross incompetence on the part of the lawyer, the notion that he can say, ‘I didn’t know.’”

And Sen. Dean Heller (R., Nev.) told the Wall Street Journal: “I was surprised at the bear hug that [Barra] gave Millikin in that hearing. Even if he didn’t know, he had an obligation to know.” Sen. Richard Blumenthal (D., Conn.) told the newspaper that Barra has “a blind spot” in regard to Millikin.

Schanzer, the Friedland CEO, said that Barra should usher out Milliken in part because GM “is a poster-child company for the United States, identified with so many things related to who we’ve become, especially after the bailout” of the company by the federal government in 2009.

“It’s one thing to signal, it’s another thing to actually change the culture. Some of the change has to be organic, but some has to be based on messages that you send to the marketplace.”

The other person, the attorney with long ties to GM, added that “it looks like the secretive nature of the legal department played a big role in the delay. Even if [Millikin] didn’t know, he should have known. He was in charge of a department that screwed up.”

For her part, Barra has continued to stand by Millikin, who became GM’s general counsel in 2009 shortly after the company began its government-funded bankruptcy.  So has GM’s new chairman, Theodore “Ted” Solso. “He is really needed right now to right the ship,” said the former Cummins Cummins CEO who has been non-executive chairman of GM since the beginning of Barra’s tenure as CEO early this year. “It would be a huge mistake if Mike were to leave the company right now.”


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