Published on July 17, 2014

GM's top lawyer, Delphi CEO face Senate panel over delayed recalls

By Nick Bunkley, Crain News Service

WASHINGTON (July 17, 2014) — General Motors Co.’s top lawyer and the CEO of Delphi Automotive today will speak publicly for the first time about GM’s recall of 2.6 million vehicles for faulty ignition switches.

Mike Millikin, GM’s general counsel, plans to tell a Senate subcommittee that the auto maker has reorganized its legal department in recent months and changed the way lawsuits involving deaths and injuries are handled. GM also has hired an outside law firm to review its litigation practices.

The Senate panel also will hear from Kenneth Feinberg, the lawyer who is administering a compensation plan for crash victims on behalf of GM. Mr. Feinberg is scheduled to testify first starting at 10 a.m. Eastern time, followed by a panel of Mr. Millikin, GM CEO Mary Barra, Delphi CEO Rodney O’Neal and lawyer Anton Valukas.

Mr. Valukas, who joined Ms. Barra at a House of Representatives hearing in June, wrote a 325-page report detailing why GM failed to recall the vehicles with bad switches for more than a decade after engineers first learned of problems. Today’s hearing is being conducted by the Senate Committee on Commerce, Science & Transportation’s consumer protection subcommittee.

Mr. Millikin is expected to face particularly pointed questions over how his department settled numerous legal claims linked to the switches beginning in 2006. At least five of the 15 employees that GM dismissed for their role in the situation were lawyers.

In prepared remarks submitted to the Senate committee, Mr. Millikin says he knew nothing about the defect until early February, about a week before the first recall. “Had I learned about it earlier, I would have taken action earlier,” he says in the remarks, which were obtained by the Detroit News and Reuters on July 16.

The Valukas report says GM settled cases for as much as $5 million without informing Mr. Millikin, in accordance with GM’s policies at the time. Mr. Millikin says that he has since ordered his staff to bring any settlements or trials involving a death or serious injury to him for review and that any open engineering issues related to the cases will be looked into.

Delphi made the switches at a plant in Mexico.

Documents released by the House committee and reviewed by Valukas for his report show that a now-fired GM engineer, Ray DeGiorgio, approved a switch design that he knew fell short of GM’s specifications. A Delphi engineer notified Mr. DeGiorgio in 2002 of subpar test results and asked how to proceed, but Mr. DeGiorgio said to make no changes because he didn’t want to risk delaying the launch of the 2003 Saturn Ion.

GM later used the same switch on the Chevrolet Cobalt. It says crashes linked to the switch resulted in at least 13 deaths and 54 injuries. A weak spring in the switch allowed the key to slip out of the “run” position, turning off the engine and disabling power steering, brake assist and airbags.

Mr. Feinberg, whom GM has authorized to determine victim payouts without its oversight, plans to accept claims from Aug. 1 through Dec. 31.

GM faces federal and state criminal investigations into the delayed recalls.

Congress and the Department of Transportation’s inspector general are also examining the National Highway Traffic Safety Administration’s handling of the recalls to determine how the agency could have better tracked and identified the defective switches.

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This report appeared on autonews.com, the website of Automotive News, a Detroit-based sister publication.

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