- Jul 17, 2014
Five key takeaways from today's GM hearing on Capitol Hill
General Motors executives were back on Capitol Hill on Thursday for another round of testimony before a Congressional subcommittee investigating the company's delays in addressing an ignition-switch defect that killed more than a dozen motorists.
At times, the proceedings took a more conciliatory tone than previous hearings.
CEO Mary Barra was joined for the first time by GM's chief counsel, Michael Millikin, along with Delphi Automotive CEO Rodney O'Neal and Kenneth Feinberg, a consultant GM has hired to run a victims-compensation fund.
Anton Valukas, who authored a report on GM's decade-long mishandling of the crisis, also testified Thursday before the Senate Consumer Protection subcommittee.
At times, the proceedings took a more conciliatory tone than previous hearings, with lawmakers taking turns praising Barra for her candor and efforts thus far to reverse the company's lax safety culture. But the senators also skewered Millikin and the GM legal department throughout the morning and early afternoon sessions.
Scroll down, and have a look at five key takeaways from the latest round of testimony.
GM Will Not Waive Bankruptcy Shield
In the most significant revelation of the day, Millikin said General Motors would not waive the liability shield provided by the company's 2009 bankruptcy.
"We will not," he said when asked point-blank about that question by Sen. Richard Blumenthal (D-Conn.), a frequent critic of GM and its response to the ignition-switch problem, which has been tied to at least 13 deaths and 54 crashes.
Millikin said that General Motors would not waive the liability shield provided by the company's 2009 bankruptcy.
Blumenthal then pressed Millikin to unseal records from court cases that resulted in confidential settlements, and he responded again, "We will not." Blumenthal followed by asking Millikin to allow a group of employees fired in the wake of the Valukas report to waive confidentiality requirements that were part of their severance packages, and Millikin again rebuffed the congressman.
The exchange was day's most tense moment, and made it clear that GM's cooperation in aiding various probes of the ignition-switch issue only went so far.
Valukas: Accurate Or Not?
On a related bankruptcy note, Sen. Claire McCaskill (D-Mo.) asked Barra if she believed the 325-page report compiled by Valukas, which found pervasive "incompetence and neglect," was factual and accurate. She agreed. But that, of course, doesn't mean that General Motors would agree with the report's findings in court.
Asked if he would also agree the report was factually accurate, Millikin said, "I'm not familiar with that position in bankruptcy court." Pressed on the question, he later said his reluctance to make such a stipulation was "related to attorney client privilege."
The attorney-client-privilege answer was reminiscent of GM's response to NHTSA in a death inquiry related to a fatal accident in Texas.
The attorney-client-privilege answer was reminiscent of GM's response to the National Highway Traffic Safety Administration in a death inquiry related to a fatal accident in Texas (see picture below) since linked to the ignition-switch flaw.
The New York Times revealed Wednesday that GM cited attorney client privilege in its lack of response to that query. In three other death-inquiry responses, the company simply said, "GM opts not to respond." Based on public documents obtained through a Freedom of Information Act request, the report cast further doubt on GM's forthrightness with NHTSA.
Asked about the report during testimony, Millikin said, "It was news to me."
GM Won't Support New Laws
Under the "new" GM, the company has emphasized placing safety at the forefront of its mission in its public-relations efforts. But Thursday, GM officials declined to support to stricter laws that would ostensibly prevent another safety-related fiasco and provide more transparency on traffic-fatality data.
Asked by Blumenthal whether she would support legislation that would criminalize the deliberate concealment of a safety defect, Barra deferred. Asked if she would support legislation that would make more data on fatal accidents available to the public, Barra said that GM supported efforts to make the NHTSA website "more useful" and add a vehicle-identification number database to the bill.
Finally, asked if she would support legislation that would mandate safety concerns being made public before lawsuits are sealed, Barra deferred, saying she would have to understand in greater detail.
Millikin Under Microscope
Barra has caught the wrath of Congress in previous hearings. It was Millikin's turn Thursday. Several members of the committee expressed disbelief that he was allowed to keep his job when GM parted ways with at least five members of its legal staff in the fallout of the Valukas report.
McCaskill asked Millikin, "I don't understand how you still have your job. ... Can you explain that to me?"
At one point, McCaskill asked Millikin, "I don't understand how you still have your job. ... Can you explain that to me?"
Millikin, who has been at General Motors for more than three decades and served as the company's top in-house lawyer since 2009, said he didn't learn about the ignition-switch defect until February 2014. Congressmen were incredulous at that statement.
McCaskill noted GM lawyers working under Millikin knew about the potential risk of punitive damages from a lawsuit in October 2010 and again in July 2011, then in April 2012 outside counsel had warned the GM legal department of potential liability related to the ignition switches. GM's legal department again new in of the possibility of punitive consequences following engineer Ray DeGeorgio's deposition in a Georgia lawsuit taken in April 2013.
"Once again, you were warned," McCaskill told Millikin. "... this is either gross negligence or gross incompetence on the part of a lawyer."
Details Emerge On Compensation Fund
Feinberg, the outside consultant who has run similar compensation funds after disasters like 9/11, the BP oil spill and the Boston Marathon bombings, shed more light on the criteria and rules for prospective claimants.
In an effort to head off a flood of frivolous claims, he said the first criteria for evaluating a potential claim is whether the airbags deployed. If they deployed, the prospective claims are not eligible for these funds.
Another key question about his fund is how victims of long-ago car crashes might offer proof their accident was caused by an ignition-switch flaw when records or the wreckage itself may be unavailable.
The fund will begin accepting claims Aug. 1 and receive them through Dec. 31.
He said his evidence threshold is "a lot less burdensome than if they have to go to court to prove their claim, I'll tell you that." Feinberg said there were a "menu of options" that included police reports, black boxes, insurance reports, warranty and maintenance reports and photographs.
The fund will begin accepting claims August 1 and receive them through December 31. Once a settlement offer has been issued from Feinberg's staff, claimants will have 90 days to decide whether to accept.
That timeframe was a point of contention later in the hearings, because Blumenthal said claimants may want to wait until the outcome of a Department of Justice investigation into GM's criminal liability in the ignition-switch crisis before deciding whether to accept an offer.