Wed, Mar 12, 2014 - Page 15 News List

General Motors, committee start recall probe

Reuters, DETROIT, Michigan

General Motors Co (GM) hired two law firms with ties to the automaker to look into its recall of cars blamed for 13 deaths, and a US Congressional committee said it would also investigate the company’s response to a defect that first came to light a decade ago.

The internal probe will be led by Jenner & Block chairman Anton “Tony” Valukas, who investigated Lehman Brothers after the financial services firm collapsed in 2008, and alleged then that Lehman used accounting gimmicks and had been insolvent for weeks before it filed for bankruptcy.

GM has worked with Jenner & Block since 2002 and at least two of the automaker’s former top attorneys, Robert Osborne and Elmer Johnson, were partners at the Chicago law firm.

GM said lawyers from King & Spalding, which represented GM during some of its bankruptcy proceedings and other litigation work since, would also work on the recall review ordered by GM chief executive Mary Barra.

Co-leading the recall investigation with Valukas is GM’s general counsel, Michael Millikin.

Some legal experts said there could be a conflict of interest for law firms with working ties to GM to be involved in the investigation, but GM spokesman Selim Bingol said there is no conflict of interest.

Valukas “has been charged to go where the facts take him and give the company an unvarnished report on what happened. He is the ideal person to do that, given his understanding of our business and his reputation for adhering to the highest standards,” Bingol said.

In a letter to employees last week, Barra promised an “unvarnished” look at the recall that is occurring 10 years after the issue first came to light.

She has not granted any interviews on the matter.

GM is recalling cars to correct a condition that could allow the engine and other components, including front airbags, to turn off while the vehicle is traveling at high speed. More than 1.6 million older vehicles are affected.

The failure is believed to be caused when weight on the ignition key, road conditions or some other jarring event causes the ignition switch to move out of the “run” position, turning off the engine and most of the car’s electrical components mid-drive, with sometimes catastrophic results.

GM has recommended that owners use only the ignition key with nothing else on the key ring.

The House Energy and Commerce Committee said it is investigating GM and the National Highway Traffic and Safety Administration’s (NHTSA) response to consumer complaints related to the problems with ignition switches.

The committee, led by US Representative Fred Upton, will hold hearings in the coming weeks. Upton led the 2000 investigation into Firestone tire failures on Ford Motor Co vehicles — resulting in the TREAD Act that requires automakers to report complaints of defects to the NHTSA.

“Did the company or regulators miss something that could have flagged these problems sooner? If the answer is yes, we must learn how and why this happened, and then determine whether this system of reporting and analyzing complaints that Congress created to save lives is being implemented and working as the law intended,” Upton said in a statement.

In an e-mail, GM spokesman Greg Martin said the company was “fully cooperating with NHTSA and will do so with the Committee, too.”

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