Michigan AG Schuette takes leading role in multistate GM investigation

David Shepardson
Detroit News Washington Bureau

Michigan Attorney General Bill Schuette says the state is taking a leading role in the ongoing investigation into General Motors Co.’s recall and safety procedures.

In a Detroit News telephone interview Thursday, Schuette confirmed for the first time that Michigan is among the states investigating the Detroit automaker and its recall of 2.6 million cars with ignition switch defects that are linked to at least 13 deaths and 54 crashes. GM said in July that 45 states were investigating its conduct. The U.S. Attorney’s Office in New York, aided by the FBI and a federal grand jury and the Securities and Exchange Commission, also is investigating.

Michigan had previously declined to say if it was involved.

Schuette is among a handful of state attorneys general on the executive committee that’s overseeing the investigation. “I’m part of that. It’s important. It’s a Michigan company,” Schuette said. “The federal government and the states work in a coordinated fashion ... to determine the course of the investigation.”

He said the GM investigation would be “exhaustive and fair.” He added “there will be give and take between and among the states and the federal government.”

Schuette called the issue of consumer protection one that was important to attorneys general from both political parties.

“Consumer protection is etched in stone — it’s in the DNA of any (Michigan) attorney general, whether his or her name is (Jennifer) Granholm, (Mike) Cox, Schuette or Frank Kelley,” Schuette said. “This is tragic in every sense of the word. People died, drivers have been put at risk and tragic doesn’t adequately capture I think the sense of what has occurred to family members.”

GM was fined a record $35 million by the National Highway Traffic Safety Administration for delaying its recall and agreed to up to three years of intensive oversight by NHTSA. Faulty ignition switches in Chevrolet Cobalts, Saturn Ions and other older GM cars can allow the key to accidentally turn off the engine, disabling power brakes and air bags.

GM CEO Mary Barra fired 15 people after an internal investigation blamed the delayed recall on a “pattern of incompetence and neglect.” She has appeared four times before congressional committees to answer questions. GM has recalled a record 29 million vehicles this year built in North America in 66 separate recall campaigns.

Schuette declined to say if the total number of states investigating is still 45 but said that Michigan joined the investigation at an early stage. The investigation by states was launched soon after GM in February announced its recall of 2.6 million cars for ignition switch defects. He said he couldn’t talk about the scope of the investigation.

Schuette called the GM probe similar to a multistate Toyota recall investigation.

In February 2013, Toyota Motor Corp. agreed to pay $29 million to settle allegations by 29 state attorneys general that the automaker concealed its knowledge of safety defects in accelerator pedals. Toyota also agreed to provide restitution to vehicle owners who may have incurred costs related to safety recalls.

GM said it had repaired 992,407 vehicles as of Wednesday.

Schuette wouldn’t answer specific questions about the investigation, including about which — if any — current or former GM executives have been interviewed by state prosecutors.

GM spokesman Jim Cain said the automaker continues to cooperate with all investigations.

The Detroit News and other outlets reported that prosecutors had reached out to some current and former GM executives in July as the investigation proceeded. Prosecutors are looking at whether GM committed wire fraud in misleading federal safety regulators — and bankruptcy fraud — by failing to disclose the defects before its 2009 Chapter 11 restructuring. Transport Canada, an auto safety agency, also is looking into the callback.

GM faces more than 100 lawsuits from owners claiming economic losses related to mounting recalls. The Orange County, California, district attorney has sued GM under its state consumer protection statutes for economic damages, civil penalties and punitive damages. GM faces shareholder lawsuits and suits connected to other ignition issues in other recalled vehicles.

GM has set aside $400 million to pay claims, but said the total could hit $600 million. The automaker and the fund’s administrator, Ken Feinberg, both have repeatedly stressed that there is no cap on total claims. The fund has received more than 300 claims, including 107 for deaths, as of late last month. The fund will accept claims through Dec. 31.