General Motors Co. (GM:US) hired Jenner & Block LLP Chairman Anton Valukas, who served as a U.S. Justice Department-appointed examiner of the downfall of Lehman Brothers Holdings Inc., to help lead an internal probe of an ignition-switch failure tied to at least 13 deaths.
The investigation of the handling of the flaw that prompted the recall of 1.6 million vehicles is being conducted jointly by a team led by Chicago-based Valukas and GM General Counsel Michael Millikin, the automaker said in a statement. Attorneys from the law firm King & Spalding are also part of the team handling the inquiry, GM said.
“He sounds like a good choice because he has prosecutorial experience and has done other outside controversial investigations,” said Joan Claybrook, a former administrator of the National Highway Traffic Safety Administration and longtime consumer advocate who has been critical of GM’s response.
The issue is the first major test for GM Chief Executive Officer Mary Barra, who was promoted to replace retiring CEO Dan Akerson two weeks before an internal company decision on Jan. 31 to do a recall. She is personally leading senior executives who are monitoring progress on the recall, which includes Chevrolet Cobalt and Pontiac G5 small cars.
The internal company probe is running parallel to a query from NHTSA on what steps the company took to investigate engineering concerns and consumer complaints dating from 2004. Detroit-based GM has until April 3 to answer specific questions in a 27-page order the agency issued March 4.
GM last month said heavy key rings or jarring can cause ignition switches on some Chevrolet, Pontiac and Saturn vehicles to slip out of position, cutting off power and deactivating air bags. GM has linked the defect to at least 23 crashes, including the 13 deaths.
The auto-safety regulator could fine GM as much as $35 million, which would be the most ever by the U.S., if it finds the automaker didn’t pursue a recall when it knew the cars were defective. The agency can also seek criminal charges.
The company’s reputation may be driven by how it responds, Barra said in a March 4 note to employees.
GM “has acted without hesitation” to address the recall in the past few weeks, Barra said in a note on a website last week for employees. “We have much more work ahead of us.”
The initial recall on Feb. 13, covering 778,562 Cobalts and G5s, was widened less than two weeks later to more than 800,000 additional vehicles. Those include 2003-2007 Saturn Ions, 2006-2007 Chevrolet HHRs, 2006-2007 Pontiac Solstices and 2006-2007 Saturn Skys. Other models affected are the 2005-06 Pontiac Pursuit sold in Canada and the 2007 Opel GT sold in Europe.
GM North America President Alan Batey said in a Feb. 25 statement expanding the recall to the Saturn Ion and other models that the company’s “process employed to examine this phenomenon was not as robust as it should have been.” GM is preparing a second timeline related to that recall expansion.
Valukas, 70, was the U.S. attorney in Chicago from 1985 to 1989. He also served as special counsel to the City of Chicago investigating the city’s health-care system and in 1993 was chairman of the Illinois Governor’s Task Force on Crime and Corrections, which led to prison reform legislation, the law firm said in his biography on its Web page.
He previously represented the bankrupt assets of GM during a four-year investigation of the company’s pension accounting by the U.S. Security and Exchange Commission, which ended without any allegations against the client. Valukas won dismissal of a false claims case against Biogen Idec Inc., the maker of a cancer drug allegedly promoted for off-label uses.
A judge’s son, Valukas has represented clients including David Radler, Hollinger International Inc.’s former president. As U.S. attorney in Chicago, he was dubbed the Midwest’s Rudolph Giuliani for his hard line on white-collar crime, according to a 1989 New York Times profile.
NHTSA is seeking information on 107 separate questions about the company’s steps leading to the recall, including the 10-year timeline the company provided regulators Feb. 24.
The agency said it wants names and correspondence from any employee involved in the company’s attempts, going back to 2004, to investigate and isolate ignition-switch failures. It asks for details on why engineering fixes proposed in 2004 and 2005 weren’t implemented.
NHTSA also said it wants to know what happened after a 2007 meeting in which regulators and GM discussed an air bag failure after a Cobalt lost engine power. U.S. auto-safety regulators were told by a research team in 2007 of a possible link between defective ignition switches and air bags not deploying.
GM described the issue in a technical service bulletin to dealers the previous year that the automaker said resulted in repairs for 474 customers. NHTSA didn’t start a defect investigation at the time and GM didn’t issue a recall until this year.
NHTSA is also facing questions about why more wasn’t done to address the Cobalt safety questions in 2007 and earlier.
Claybrook on March 7 asked the Transportation Department’s inspector general to investigate.
“No one is evaluating why NHTSA failed to carry out the law,” Claybrook said. “I am asking you to undertake a full evaluation of this failure, taking into consideration the overt secrecy the agency now imposes on most of its defect investigation work so that the public is deterred from pressing the agency to act.”
Claybrook and four advocacy groups -- the Center for Auto Safety, Advocates for Highway and Auto Safety, the Consumer Federation of America and Consumers Union -- today asked congressional leaders for hearings on how GM and NHTSA handled the Cobalt recall.
“General Motors seemingly ignored the problem for nearly a decade and failed to take any corrective action despite the mounting number of deaths and injuries related to defective ignition switches,” the groups said in letters to Senate Commerce, Science and Transportation Committee Chairman Jay Rockefeller, a West Virginia Democrat, and House Energy and Commerce Committee Chairman Fred Upton, a Michigan Republican.
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