GM’s Barra confirms interview with fed investigators

Melissa Burden and David Shepardson
The Detroit News

General Motors CEO Mary Barra on Tuesday confirmed she was interviewed last year by the Justice Department as part of its investigation into the delayed recall of older Chevrolet Cobalts, Saturn Ions and other small cars for faulty ignition switches now tied to 111 deaths.

Barra said GM has cooperated fully when she was asked ahead of GM’s annual shareholders meeting in Detroit about a Wall Street Journal report that the U.S. Attorney’s Office in New York is considering a possible wire fraud charge against GM and whether the Justice Department has communicated anything to GM about its intentions or timing.

“It is their timeline,” she said. “We are going to continue to cooperate to the fullest extent we can. But beyond that, I think anything else is pure speculation and it does no one any good.”

A decision by the Justice Department on whether to pursue criminal charges against GM or any of its former or current employees, or if it will impose a fine that could be larger than Toyota Motor Corp.’s $1.2 billion settlement in March 2014 for unintended acceleration, could come by the end of the summer.

The Detroit News reported last month that GM expects the Justice Department to pursue a criminal case against it — and that the fine is likely to top the one imposed on Toyota. Toyota faces three years of oversight by a former U.S. Attorney in New York, David Kelley. Wall Street analysts have said GM could face a penalty of $2 billion or more.

Government investigators have interviewed dozens of current and former GM executives, engineers and lawyers in the 14-month-old investigation led by the U.S. Attorney’s Office in New York and aided by the FBI and a federal grand jury that has subpoeaed millions of pages of records.

It is still not clear if the government will require GM to plead guilty or allow the automaker to enter into a “deferred prosecution” agreement. In that case, GM wouldn’t plead guilty to a felony, but would undergo oversight by an outside monitor approved by the Justice Department.

The 50 U.S. state attorneys general, Securities and Exchange Commission and Transport Canada are also investigating. Current and former GM executives are also being questioned by lawyers for car owners who are suing the automaker in connection with the recalls.

A wire fraud charge — like what was used in the Toyota case — could be sought if investigators believe some sort of communication involving wire and deemed fraudulent by the government was used, said Carl Tobias, the Williams professor of law at the University of Richmond School of Law.

Tobias said he doesn’t think prosecutors will charging any former or current GM employees. “If people are not high enough in the organization, I don’t think the government wants to waste time and resources on it.”

GM fired 15 employees, including a vice president, lawyers and engineers, and disciplined five others following its internal investigation into why the company took more than a decade to recall vehicles for the ignition switch defect. GM has repeatedly denied any cover-up took place but blamed the delay on a culture of incompetence and neglect.

Wayne State University law professor Peter Henning previously told The News that the government could force the automaker to plead guilty after some in the company were aware there was a problem. Henning said the government could charge GM for false statements or for violating reporting requirements under a 2000 auto safety law called the TREAD Act.

Tobias said the DOJ investigation into Toyota took years.

“This has moved more quickly partly because GM’s cooperated more and they’ve (the government has) been through this before in a similar situation,” Tobias said.

Last May, GM admitted wrongdoing and paid a record $35 million fine to the National Highway Traffic Safety Administration and agreed to up to three years of enhanced oversight, some of which is continuing for at least another year.

The company established an independent compensation fund and said it expects to spend $550 million to pay claims. Lawyer Ken Feinberg has approved 111 death claims and more than 200 injuries tied to the defect. GM recalled a record setting 30 million vehicles in North America last year in 84 separate campaigns.