U.S. Senator Claire McCaskill today told General Motors' CEO that the "failure of [GM's] legal department is stunning" and questioned how the company's top lawyer has so far kept his job. The exchange was a part of McCaskill's hearing of her Consumer Protection Subcommittee to examine the investigation into GM's response to the defective ignition switches that have been linked to at least 13 deaths, including a fatality in Missouri, and other matters related to the ignition switch recall.
McCaskill and 10 of her colleagues, including the subcommittee's top Republican, Senator Dean Heller of Nevada, used the hearing to examine recent developments and the policy implications following GM's recalls earlier this year for Chevy Cobalts and other vehicles with defective ignition switches. In particular, the hearing focused on the various developments and findings since McCaskill's April hearing, including the role of GM's legal department, the May 29, 2014, investigative report, and the June 30, 2014, announcement of the GM Ignition Compensation Claims Resolution Facility program.
Citing the investigative report, McCaskill blasted "incompetence and deceit among engineers in positions of responsibility," adding "it is clear that the culture of lawyering-up and whack-a-mole to minimize liability killed innocent customers of GM."
McCaskill grilled GM's Executive Vice President and General Counsel Michael Millikin--bluntly asking him how he has retained his job after ticking through multiple failures of his legal department to recognize troubling litigation patterns and to meet obligations to employees, shareholders and customers in the delayed recall.
"In the aftermath of this report, how in the world did Michael Milikin keep his job? I do not understand how the general counsel for a litigation department that had this massive failure of responsibility, how he would be allowed to continue in that important leadership role in this company," McCaskill said, also holding GM CEO Mary Barra's feet to the fire, telling her: "I think you've handled this with courage and conviction but for the life of me, I [can't understand] the notion that he can say "I don't know' the failure of this legal department is stunning."
Joined by her colleague Senator Roy Blunt of Missouri, McCaskill praised General Motors' workers who "build good cars," and were also "victims of outrageously incompetent management." Approximately 6,000 people in the St. Louis and Kansas City metropolitan areas work for GM at assembly plants in Wentzville, Mo., and Kansas City, Kan.
The subcommittee members also heard testimony from Rodney O'Neal, Chief Executive Officer and President of Delphi, the company that produced the defective ignition switch for GM, and Kenneth Feinberg, who was hired by GM to establish and administer a victims' compensation program for the company.
Last month, Feinberg announced a plan for compensating victims of GM's ignition switch defect. Additionally, in May, GM released a report summarizing the investigation conducted by former U.S. Attorney Anton Valukas in relation to the defective ignition switches. This was one month after the National Highway Traffic Safety Administration (NHTSA) announced that GM agreed to pay a record $35 million civil penalty and comply with additional oversight requirements as a result of findings from NHTSA's timeliness investigation regarding the defective switches. As part of the settlement, GM agreed to provide NHTSA with full access to the results of GM's investigation into this recall, to take steps to ensure its employees report safety-related concerns to management, and to speed up the process for GM to decide whether to recall vehicles.
McCaskill noted that the subcommittee's work on the GM recall and auto safety issues will continue, with a hearing in the coming weeks to further examine failures at NHTSA in recognizing and addressing the defective ignition switch and legislative reforms to ensure the tragedies associated with the recall are not repeated.