Auditor interviews former Treasury aides in GM probe

David Shepardson
Detroit News Washington Bureau

Washington — A Treasury Department auditor is interviewing former members of the Obama administration’s auto task force to determine if General Motors Co. disclosed problems with ignition switch defects during the government’s bailout, The Detroit News has learned.

The special inspector general overseeing the $700 billion Troubled Asset Relief Program is conducting the depositions with former auto advisers, former auto officials say.

Steve Rattner, the former auto czar who left the Obama administration in 2009 after GM exited bankruptcy, and Saleem S. Khatri, who was the last Treasury official overseeing the government’s auto investments until the government’s exit from Ally Financial Inc. last year, both confirmed in separate interviews they were interviewed by the auditor’s office. Both told investigators that GM never told them anything about the ignition defects. The interviews took place in recent months.

The interviews are part of the Manhattan U.S. Attorney’s Office criminal investigation into GM’s delayed recall of 2.6 million older cars linked to at least 104 deaths and nearly 200 injuries, an official briefed on the matter said.

Rattner told reporters in May 2014 that the auto task force had no idea about safety problems with defective ignition switches.

“As best we know, the senior people at GM didn't even know about it, so they can't tell you about something they don't know. We're not forensic accountants. We're not FBI investigators. We had about 40 days to do all this due diligence and we can't find something like that out,” Rattner said, referring to GM’s speedy exit from bankruptcy in 2009 as part of a $49.5 billion government bailout.

Troy Gravitt, a spokesman for the special inspector general, declined to comment. A Treasury spokesman didn’t immediately offer a comment.

GM spokesman Jim Cain said the company hasn’t been contacted by the auditor’s office.

“SIGTARP has not contacted GM. Should GM be contacted, we will provide them our full cooperation,” Cain said.

GM has said 50 state attorneys general, the Securities and Exchange Commission and Transport Canada are also investigating GM’s delayed recall. GM CEO Mary Barra and other former and current GM executives — including former CEO Dan Akerson — have said they knew nothing about the ignition switch problems before GM decided to launch the recalls in late January 2014.

Barra fired 15 and disciplined five executives after a scathing internal report blamed the delay of the recalls for a decade on a culture of “incompetence and neglect.” The company created an independent compensation program and has set aside $550 million to pay claims; the fund has approved 104 death claims and nearly 200 injury claims.

The Justice Department probe — underway for more than a year — has been active in recent months and included dozens of interviews of current and former GM executives and employees and its former auto supplier Delphi. The government last year conducted many “Queen for a Day” interviews in New York that allowed people involved in the case to be interviewed by prosecutors in exchange for a promise not to use the testimony against them later as long as they are truthful. The technique is designed to help prosecutors get a fuller understanding of an investigation

Wall Street analysts have suggested GM may have to pay a multi-billion dollar fine to resolve the investigation and enter into a consent decree. It’s unclear if and when the government and GM will begin settlement talks. GM has said in securities filings it can’t estimate when or how much it could be forced to pay in the investigation.

The same U.S. Attorney’s Office spent nearly four years investigating Toyota Motor Corp.’s delayed recalls of millions of vehicles for sudden unintended acceleration and in March 2014 it charged Toyota with a single felony count of wire fraud and requiring the company to be overseen by a outside monitor under a consent decree.

Former auto adviser Harry Wilson said in May 2014 that the auto task force was completely unaware of the issue and noted the administration was having trouble getting information out of GM at the time.

“We didn't know about anything like this,” Wilson said. “Given how hard it was to get data out of the company at the time, even if we had asked (GM) the point-blank question, I doubt we would have gotten a straight answer.”