While GM CEO Rebukes Congressional Critics, Top Lawyer Apologizes for Recall Handling

By Tim Higgins and Jeff Plungis  

July 17 -- Mary Barra, General Motors Co.'s chief executive officer, July 17 defended her general counsel as a man of integrity after a senator said he should've been fired for the company's poor handling of a fatally flawed ignition switch.

“I need the right team,” Barra said, adding that the problems with the switch and the potential for punitive damages weren't brought to the general counsel's attention. “Mike Millikin is a man of tremendous integrity.”

Sen. Claire McCaskill (D-Mo.), chairman of the Senate Subcommittee on Consumer Protection, which July 17 held the fourth congressional hearing into GM's slow recall of fatally flawed ignition switches, said the company should have dismissed its top lawyer. A culture of “lawyering up” as a defense against lawsuits “killed innocent customers” of GM, McCaskill charged.

“How in the world, in the aftermath of this report, did Michael Millikin keep his job?” said McCaskill, who otherwise praised Barra for her efforts to fix the company. The senator told Barra that excusing Millikin's inaction represented a “blind spot,” saying that Eric Shinseki wasn't told of long delays at Veterans Affairs hospitals, yet he was removed as secretary of Veterans Affairs.

Millikin and Barra testified before the Senate panel, along with Anton Valukas, the lawyer who led GM's internal investigation, and Rodney O'Neal, CEO of Delphi Automotive Plc. Kenneth Feinberg, who is administering a victim compensation program, appeared separately.

GM has recalled almost 26 million cars in the U.S. so far this year, an annual record. Since the February recall of defective vehicles tied to the deaths of some drivers, several lawsuits have been filed against the Detroit-based automaker, in which shareholders allege that board members are liable for false statements and “ongoing” quality control issues .

Lawyers Failed.

Millikin said some of his staff failed the company in handling the ignition-switch defect. He apologized for how the recall was handled and said he will work to ensure such a failure never happens again.

“We had lawyers at GM who didn't do their jobs; didn't do what was expected of them,” Millikin said in his statement. “Those lawyers are no longer with the company.”

The Valukas investigation found that Millikin hadn't been informed of the lengthy review of the Chevrolet Cobalt switch until the recall decision was made in 2014 and that he was also unaware of litigation involving fatal accidents.

During the June 18 House hearing, Valukas told lawmakers that Delphi, which manufactured the faulty ignition switch to GM's specifications, didn't give his investigators access to the supplier's witnesses and received limited response to requested records.

Sen. Richard Blumenthal (D-Conn.) said GM's lawyers failed the company and the public. He predicted that an ongoing U.S. Department of Justice criminal investigation would find culpability.

“Lawyers are typically supposed to be the ones who make sure corporations comply with the law in spirit and letter,” Blumenthal said. “Here the lawyers for GM actually enabled cover-up, concealment, deceit and even fraud.”

Feinberg said he didn't know enough about the fact of the case to have an opinion on GM's lawyers.

By Tim Higgins and Jeff Plungis  

To contact the reporters on this story: Tim Higgins in Washington at thiggins21@bloomberg.net; Jeff Plungis in Washington at jplungis@bloomberg.net

To contact the editors responsible for this story: Jamie Butters at jbutters@bloomberg.net; Romaine Bostick at rbostick@bloomberg.net

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