Bloomberg News

GM Defect Recall Delay Probed by Connecticut and Florida

June 12, 2014

GM ignition

Keys hang from the ignition during a service recall for a General Motors Co. 2005 Saturn Ion at Liberty Chevrolet in New Hudson, Michigan. Photographer: Jeff Kowalsky/Bloomberg

General Motors Co. (GM:US)’s delayed decision to recall almost 2.6 million cars for ignition-switch defects is being investigated by attorneys general in Florida, Connecticut and at least six more states.

GM has acknowledged 13 deaths tied to the defect, which can cut power to a vehicle’s steering and brakes and prevent air bags from deploying in a crash. Company executives were aware of the defect for at least a decade before the recall.

“We are a member of a multistate group that is looking into complaints about General Motors,” Whitney Ray, a spokesman for Florida Attorney General Pam Bondi, said yesterday.

Attorneys general in Connecticut, Indiana, Arkansas, Illinois, Iowa, Kentucky and Louisiana are also investigating, representatives from their offices confirmed yesterday. Separately, federal prosecutors in Manhattan are running a probe, a person familiar with the matter has said.

The company this month fired 15 people it said played a role in the recall delay. It announced the firings immediately after releasing the results of an internal investigation led by former Chicago U.S. Attorney Anton Valukas, now chairman of the law firm Jenner & Block LLC.

GM faces about 85 federal lawsuits filed by car owners claiming their vehicles lost value as a result of the recall and more claims over injuries and deaths attributed to crashes.

Cases Moved

Federal judges this week transferred the economic-loss cases filed across the nation to U.S. District Judge Jesse Furman in New York. He will preside over pretrial litigation and disclosure of evidence.

James Cain, a spokesman for GM, declined yesterday to comment on the state investigations, deferring to company filings and the Valukas report.

In an April filing with the U.S. Securities and Exchange Commission, GM said it was the subject of “various inquiries, investigations, subpoenas and requests for information” from the office of U.S. Attorney Preet Bharara in New York, the U.S. Congress, the National Highway Traffic Safety Administration, the SEC and one state’s attorney general.

The company said that it was cooperating fully in those probes and that they might “result in the imposition of damages, fines or civil and criminal penalties.”

To contact the reporters on this story: Andrew Harris in federal court in Chicago at aharris16@bloomberg.net; Christie Smythe in Brooklyn at csmythe1@bloomberg.net

To contact the editors responsible for this story: Michael Hytha at mhytha@bloomberg.net Charles Carter, Joe Schneider


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