Thursday 17 July 2014

Senate Expected to Focus on G.M. Lawyers’ Role

Photo
Mary Barra, G.M.'s chief, who testified before Congress in April on faulty ignition switches, will appear a fourth time on Thursday. Credit Gabriella Demczuk/The New York Times

DETROIT — A Senate panel on Thursday will zero in on how General Motors hid a deadly vehicle defect for years, and what can be done to prevent corporations from keeping safety issues secret from consumers and regulators.

The hearing in Washington will be the fourth appearance before Congress by Mary T. Barra, G.M.'s chief executive, since the automaker began recalling millions of small cars in February to repair a faulty ignition switch tied to 13 deaths.

But lawmakers are now looking beyond why G.M. repeatedly did not fix defective switches, and focusing on how it kept accident victims, their families and government officials in the dark.

Joining Ms. Barra on the witness stand will be Michael P. Millikin, G.M.'s general counsel, whose legal staff fought ignition lawsuits for years despite knowing that company engineers and investigators were aware of safety issues and related accidents.

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An internal investigation of the switch defect prompted G.M. in April to fire 15 employees for their role in the delayed switch recall.

At least five of those employees were lawyers, according to a person briefed on the matter who was not authorized to discuss it publicly. Mr. Millikin avoided any punishment.

A spokesman for Senator Claire McCaskill, a Missouri Democrat and chairwoman of the subcommittee on consumer protection, product safety and insurance, which is holding the hearing, said Mr. Millikin and Ms. Barra would be asked about how G.M. lawyers stymied internal efforts to recall and re pair the cars.

"The senator will be posing some tough questions that haven't yet been answered about the role G.M.'s legal department played in delaying this recall," said the spokesman, Andrew Newbold.

Mr. Millikin is expected to admit mistakes by his staff and detail new internal protocols intended to increase communication between lawyers and safety officials in the company.

James Cain, a G.M. spokesman, said the company "looks forward" to discussing the concerns of Senator McCaskill and other subcommittee members. "We'll do our best to answer the questions put to us," he said.

The hearing is occurring at a turning point in G.M.'s safety crisis, as lawmakers begin pressing for legislation to hold companies accountable for concealing safety problems.

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OPEN Timeline

Timeline: G.M.'s Ignition Problem: Who Knew What When

On Wednesday, three senators introduced a bill that would set criminal penalties for corporate executives who knowingly hide product defects from the public.

Other legislation in the works related to G.M. includes a bill to increase the fines that the federal government can levy on automakers that do not report defects to $300 million from $35 million.

The National Highway Traffic Safety Administration has already fined G.M. the maximum of $35 million for not informing it of the defect in a timely manner.

But S enator Richard Blumenthal, a Connecticut Democrat and a sponsor of the bill, said G.M.'s conduct shows the need for tough penalties for corporate officials who hide dangerous products.

"Concealment can kill, and corporate officers should be held accountable for it," he told reporters in Washington.

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The bill would establish penalties of as much as five years in prison and fines for officials who conceal defects, while protecting executive whistle-blowers from criminal liability if they notify regulators of hidden defects.

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The Truth Behind a Fatal G.M. Crash

Nearly a decade ago, Rhonda Erickson's son died in a car accident. It is now known his is one of the thirteen deaths tied to General Motors' ignition switch malfunction.

The hearing will also explore the role Delphi, the ignition switch supplier, played in developing the part, which did not meet G.M.'s specifications.

Rodney O'Neal, chief executive and president of Delphi, will testify and is likely to be asked about the circumstances surrounding the decision by Raymond DeGiorgio, a G.M. engineer, to authorize improvements to the switch in 2006.

Mr. DeGiorgio, who was among the 15 people fired in April, has not spoken publicly about the switch changes. G.M. contends that he secretly ordered the change on his own, which frustrated efforts to identify the safety issues a nd contributed to the long delay in the recall.

Delphi has already given documents to congressional investigators and to the Justice Department, which is pursuing a criminal investigation of G.M. "Delphi looks forward to continuing our cooperation with the Senate at Thursday's hearing," said Claudia Tapia, a spokeswoman.

Also slated to testify are Anton R. Valukas, the former federal prosecutor who conducted G.M.'s internal investigation, and Kenneth R. Feinberg, the lawyer who will administer G.M.'s compensation payments to accident victims and their families.

Separately, a bill in the Senate to require rental car companies to fix any vehi cle under recall before renting it out again, long opposed by automakers, now has the support of G.M.

"If enacted, it will give those who rent a vehicle, regardless of make or model, the peace of mind that the car they are in is safe," Ms. Barra said in a statement.

Car manufacturers have maintained that mandatory repair legislation would allow rental companies to sue automakers over the revenue that is lost when the car is being fixed. But a new version of the bill would limit automakers' liability.

Senator Charles E. Schumer, Democrat of New York and sponsor of the bill, called G.M.'s backing "a huge crack in the dam that's been holding back support."

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