Senators call on General Motors' CEO to fire chief defense lawyer
By Marcy Gordon And Dee-ann Durbin, AP
July 19, 2014, 12:03 am TWN
WASHINGTON--Lawmakers on Thursday demanded General Motors (GM) fire its chief lawyer and open its compensation plan to more potential victims as a Senate subcommittee delved deeper into GM's mishandling of the recall of small cars with defective ignition switches.
Senator Claire McCaskill, D-Mo., who chairs the subcommittee, praised GM CEO Mary Barra, saying she “has stepped up, and with courage and conviction has confronted the problem head on and the corporate culture that caused it.”
But McCaskill also put Barra on the spot, telling the CEO that she should have fired GM's corporate counsel, Michael Millikin, based on the conclusions of an internal report by outside attorney Anton Valukas. Millikin sat next to Barra as she defended him as a man of “tremendously high integrity.”
The Valukas report found that GM's legal staff acted too slowly to share details of settlements it was making in cases involving Chevrolet Cobalts and Saturn Ions where the front air bag hadn't deployed in a crash, possibly due to a defect in the ignition switch. The lawyers didn't alert engineers or top executives to a potential safety issue.
She also questioned why Millikin didn't inform GM's board or the U.S. Securities and Exchange Commission of the potential for punitive damages as GM settled the cases, saying, “This is a either gross negligence or gross incompetence on the part of a lawyer,” she said.
Barra said Millikin had a system in place but it failed. Some lawyers were among the 15 people the company let go based on Valukas' report.
Millikin said he only learned about the ignition switch problems in February and acted quickly once he did. He said any potential settlement, no matter how small, must now be brought to him before any action is taken.
But Senator Richard Blumenthal, D-Connecticut, also called for Millikin to be fired, saying that an ongoing Justice Department investigation will likely find evidence of “cover-up, concealment, deceit and even fraud” within GM's legal team.
He also asked Millikin whether the company would make public all of the documents it gave to Valukas, whether it would unseal previous settlements and whether GM would waive the legal shield from its bankruptcy that protects it from lawsuits related to crashes that happened before July of 2009.
In all three cases, Millikin said no.
Millikin also acknowledged that the attorneys dismissed from GM received a retirement package based on the salary they would have made if they hadn't been terminated. Senator Roy Blunt, R-Missouri, suggested that's why the attorneys aren't challenging their dismissal.
GM has admitted that it knew about the faulty switches for more than a decade before recalling the cars. The ignition switches can fall out of the “run” position, causing the engines to stall. It took years for GM engineers to connect the switch problem to the failure of front air bags to deploy in certain crashes.