Senate Panel Examining Role of GM Legal Department – ABC News

Posted: Thursday, July 17, 2014

A Senate panel will pose questions to a new set of key players Thursday as it delves deeper into General Motors’ delayed recall of millions of small cars.

GM CEO Mary Barra will certainly be asked about how she’s changing a corporate culture that allowed a defect with ignition switches to remain hidden from the car-buying public for 11 years. It will be Barra’s second time testifying before the panel.

But Senators at a hearing of the Senate Commerce subcommittee on consumer protection might sling their most pointed questions at GM General Counsel Michael Millikin as they drill down on the role the company’s legal department played in the mishandled recall.

An internal investigation led by former federal prosecutor Anton Valukas — paid for by GM — showed that even as GM lawyers recommended the settlement of similar cases involving crashes where front air bags failed to deploy in Chevrolet Cobalts and Saturn Ions, they didn’t alert higher-ups, including Millikin, to a potential safety issue.

Lawmakers may also question Valukas about the report’s conclusion that a lone engineer, Ray DeGiorgio, was able to approve the use of a switch that didn’t meet company specifications, and years later, to order a change to the switch without any senior executives at GM being aware.

Sen. Richard Blumenthal, D-Conn., a Senate subcommittee member who has criticized the Valukas findings as “the best report money can buy,” says he’ll ask Valukas at the hearing “why they failed to go beyond the low-level management and engineers.”

Also testifying will be Rodney O’Neal, the CEO and president of Delphi. His company manufactured the ignition switches. Compensation expert Kenneth Feinberg will testify about the plan he recently unveiled for compensating victims of crashes caused by the faulty switches.

Some other questions senators may ask:


—Q: How does GM plan to change the corporate culture exposed by Valukas’s report? In light of the revelations, was the termination of 15 employees sufficient?

Valukas’s investigation found a dysfunctional culture in which people didn’t take responsibility for fixing problems. Barra has said that GM has restructured its process for making safety decisions, elevating it to the company’s highest levels.

Senators also may have more questions on how much Barra knew about the problem with the ignition switches when she was GM product development chief.


—Q: What role did the company’s legal department play in the delayed recall?

GM attorneys signed settlements with families of some crash victims in cases where the switch defects figured. Blumenthal said in an interview he wants to know, “Why did GM insist on keeping the settlements secret?”


—Q: Why did Delphi send GM the switches even when its own tests showed that the force needed to turn them didn’t meet GM’s specifications?

Delphi, once a GM division, didn’t allow Valukas’s investigators to interview its employees and turned over a limited number of documents.

Senators likely will ask O’Neal whether Delphi should have notified GM higher-ups after DeGiorgio approved the out-of-spec switches. DeGiorgio also told Delphi to alter the switches in 2006 but not change the part number, making the change hard to track. That raises the question of why Delphi agreed to keep the part number the same.


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