GM legal department comes under fire at Senate hearing
WASHINGTON (Reuters) - General Motors' <GM.N> legal department came under fire in a Senate hearing on Thursday, as lawmakers questioned why the automaker took more than 10 years to recall cars with ignition switch flaws while its lawyers wo...
WASHINGTON (Reuters) - General Motors' <GM.N> legal department came under fire in a Senate hearing on Thursday, as lawmakers questioned why the automaker took more than 10 years to recall cars with ignition switch flaws while its lawyers worked on numerous cases involving deaths or injury caused by the malfunctioning switch.
Senator Claire McCaskill, chairwoman of the Senate Commerce subcommittee, questioned why GM's general counsel, Michael Millikin, kept his job after a company review released last month criticized lower-level lawyers for not escalating the safety issue.
"It is very clear that the culture of lawyering up and whack-a-mole to minimize liability in individual lawsuits killed innocent customers of General Motors," McCaskill said.
"I do not understand how the General Counsel for a litigation department that had this massive failure of responsibility, how he would be allowed to continue in that important leadership role in this company."
Rodney O'Neal, the chief executive of Delphi Automotive <DLPH.N>, the maker of the defective part, testifying for the first time, largely denied culpability for his company in the ignition switch flaw.
So far, GM has attributed 16 deaths to ignition switch problems. Of those, 13 deaths and 54 crashes have been attributed to the specific defect in Chevy Cobalts and Saturn Ions in which the ignition switch can slip from the "run" to the "accessory" position, causing the engine to stall, air bags to not deploy, and a loss of power brakes and power steering.
The House of Representatives and Senate have held a handful of hearings in which they have demanded answers from GM CEO Mary Barra about why the automaker failed to act more quickly, but lawmakers have not sharply focused on GM's lawyers.
In his prepared testimony, Millikin said GM has appointed an outside law firm to review its litigation practices.
Millikin and other top GM executives were largely exonerated in an internal investigation that GM hired lawyer Anton Valukas to conduct and that was released last month. Instead, Valukas blamed lower-level lawyers and engineers for failing to properly flag the issue and not connecting air bag failures to the ignition switch defect.
Lower-level lawyers were among the 15 employees that GM forced out over the scandal. Millikin said in his prepared testimony that he did not learn of the extent of the specific defect until February of this year.
DELPHI IN THE HOT SEAT
Delphi's CEO and his company have largely avoided the harshest criticism from lawmakers investigating the deadly part and the handling of the recall.
In prepared testimony, O'Neal told the Senate panel that his company made "the switch that GM approved and wanted."
"GM knowingly approved a final design that included less torque than the original target," he said. "In our view, that approval established the final specification."
O'Neal said Delphi has four production lines running to make replacement ignition switches to replace the faulty parts that have been recalled by GM. He said Delphi has shipped more than 1 million new switches and is on track to deliver more than 2 million by the end of August.
The Justice Department is not targeting Delphi in its criminal probe of GM's handling of the safety defect, according to sources familiar with the investigation.
Appearing along with Millikin and O'Neal on Thursday are Barra, Valukas, and Kenneth Feinberg, a prominent lawyer helping GM establish a victims' compensation fund.