Detroit — General Motors CEO Mary Barra says the Detroit automaker would like to resolve the investigations into the company’s handling of a deadly ignition switch recall by government agencies and added the company has adopted some recommendations made by an outside law firm.
In a 70-minute roundtable with Detroit News editors and reporters at the automaker’s Renaissance Center headquarters, Barra said she would like to wrap up ongoing investigations by the U.S. Attorney’s Office in New York, 48 state attorney general’s offices and the U.S. Securities and Exchange Commission and Canadian authorities.
“We don’t control the timeline — others do,” Barra said, saying the company is trying to be as transparent as possible. “That’s why our approach has been on every step of the way since Day 1: We will cooperate fully. We want to have those issues resolved and put behind us — all litigation and discussions with (government) agencies — but we don’t control it, so all we can do is cooperate.”
Some Wall Street analysts have speculated GM could be forced to pay billions in fines connected to its delayed recall of 2.6 million older Cobalt, Ion and other cars linked to at least 30 deaths to resolve the investigations. GM faces 107 class-action lawsuits seeking tens of billions of dollars connected to an alleged loss of value of vehicles on the road connected to various GM recalls. Another 63 lawsuits allege injury or death related to defects in recalled vehicles, including the ignition switch matters.
In July, GM disclosed it hired law firm Quinn Emanuel Urquhart & Sullivan LLP to conduct a complete review of its litigation practices, and that it hired two outside law firms to aid it in responding to suits. GM’s general counsel Michael Millikin told Congress in July he reviews all serious injury or death claims, a change from prior practices in which GM lawyers could settle cases for as much as $5 million without notifying Millikin.
Barra said the firm had made recommendations that the company adopted but she declined to go into detail. “There’s many of the recommendations that have already been put in place,” she said. Other less significant suggestions are on hold until the company names a new general counsel. “There’s some decisions that we’ll wait and make sure that he or she can make those decisions to have complete control over the staff.”
Barra said the biggest change is ensuring the legal department has the proper resources and making sure the information silos between company lawyers and other departments are eliminated.
Asked if Millikin, 66, had been forced to retire, she praised him at length as a man of integrity that she had known for 20 years. Millikin came under harsh criticism from Congress in July — including several calls for him to resign — and announced earlier this month he plans to retire early next year.
“I wish he would have stayed another decade,” Barra said, adding that GM is actively searching for a replacement. “He deserves to enjoy life beyond General Motors after a distinguished career where he made great contributions.”
GM said it immediately will begin an external search to replace Millikin, who has held the top legal job at GM since 2009. He holds a key position in GM’s executive team as the company continues to face legal challenges and investigations in wake of its ignition switch recall crisis this year.
GM has argued that it should not be liable for economic loss cases, but has created a victim’s compensation fund headed by outside compensation expert Ken Feinberg to pay for injury and death claims linked to ignition switch recalls. Feinberg has approved 30 death claims and 31 injury claims; GM has set aside $400 million for the claims, but has said it could rise to $600 million.
The U.S. Attorney’s Office in New York — aided by a federal grand jury and the FBI — is reviewing whether GM or its lawyers misled federal regulators over the Cobalt and Ion ignition switch problems or committed bankruptcy fraud by failing to disclose issues before its 2009 restructuring. A similar Justice Department investigation into Toyota Motor Corp.’s misleading the National Highway Traffic Safety Administration took nearly four years and resulted in a $1.2 billion fine for the Japanese automaker and a monitor to oversee Toyota’s compliance with a deferred prosecution agreement.
Barra also noted that GM is working with its suppliers to improve quality because, she said, GM is “still seeing too many things” that have led to safety issues. “We are finding them are fixing them quickly,” Barra said.
Barra declined to offer an opinion about the massive recall of 7.8 million vehicles by 10 automakers in the United States involving Takata Corp. airbags linked to four deaths in Honda vehicles and dozens of injuries. “This is one where we are not in the center of,” she said, but would not elaborate.
Asked about the reaction of GM on Capitol Hill during four congressional hearings between April and July, Barra said the episode showed GM needed to do more to improve its relationships with regulators, members of Congress and other government officials worldwide. She praised Bob Ferguson — whom she moved back to the role as the company’s top lobbyist after a stint running Cadillac. GM had few defenders at early hearings.
“One of the lessons General Motors has maybe had to learn more than once is relationships matter,” Barra said.