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GM lawyers blasted for 'deceit' in switch recall

General Motors' legal chief came under immediate fire at a Senate subcommittee hearing today.

"How in the world did Michael Millikin keep his job," exclaimed Sen. Claire McCaskill (D-Mo.), chair of the Senate Subcommittee on Consumer Protection, Product Safety and Insurance.

Millikin's lawyers were involved in "cover-up, concealment, deceit and even fraud," and probably will be accused of crimes by the Justice Department, said Sen. Richard Blumenthal (D-Conn.).

Kenneth Feinberg, administer of the General Motors compensation fund, waits to begin a Senate Consumer Protection, Product Safety, and Insurance Subcommittee hearing in Washington.
Andrew Harrer | Bloomberg | Getty Images
Kenneth Feinberg, administer of the General Motors compensation fund, waits to begin a Senate Consumer Protection, Product Safety, and Insurance Subcommittee hearing in Washington.

Millikin is one of the witnesses testifying at the hearing, along with GM CEO Mary Barra, and Rodney O'Neal, CEO of the supplier that made the faulty ignition switch linked to 13 deaths.

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It will be Barra's fourth appearance on Capitol Hill since GM recalled 2.6 million small cars equipped with defective ignition switches.

Millikin, GM general counsel, has not yet spoken publicly about decisions by his legal department related to lawsuits arising from the ignition switches.

First to testify was Kenneth Feinberg, the lawyer GM hired to administer a compensation fund to for victims who were injured or families whose loved ones died in accidents caused by the ignition switches malfunction. Feinberg will start accepting applications for settlements Aug. 1.

Read MoreGM's legal tactics in the crosshairs of Congress

He emphasized to the Senate panel that GM put no limits on compensating victims. "Uncapped," Feinberg emphasized. The only limit, he said, is that the vehicle is among the 2.6 recalled for the defective switch.

"We will make sure compensation is generous," he said.

Delphi manufactured the ignition switches for GM at a plant in Mexico and didn't fully cooperate with an independent investigation by former U.S. Attorney Anton Valukas into why it took GM more than a decade to recall the cars after company engineers first discovered the switch flaw.

GM and Delphi documents gathered in investigations of the recall show that the two companies had contentious exchanges on the switches as early as 2001, when a GM engineer first found the switches could rotate too easily out of the "run" position. When that happens, it shuts off the engine, kills power assist to the steering and brakes and, not understood by GM's own engineers until years later, it can disable airbags.

Read MoreGM resists more recalls

In September of 2001, a GM memo says "this supplier has had one issue after another," and "10 out of 12 switch failed to meet engineering requirements." However, the memo is from Ray DeGiorgio, the engineer GM fired for his pivotal role in approving faulty switches, keeping them in production and trying to change to a better design without telling anybody.

At a June 18 House subcommittee hearing, Barra said, "I, personally, don't find Mr. DeGiorgio credible."

Valukas also will testify, along with Kenneth Feinberg, the lawyer GM hired to administer a compensation fund to for victims who were injured or families whose loved ones died in accidents caused by the ignition switches malfunction. Feinberg will start accepting applications for settlements Aug. 1.

Read MoreDocuments show General Motors kept silent on fatal crashes

In his report, Valukas said GM lawyers approved a $5-million settlement with one victim without notifying Millikin, which was consistent with corporate policy. Millikin only needed to approve settlements of more than $5 million. In written remarks for the Senate subcommittee, Millikin said that's been changed. He now will be part of the process when a settlement involves a death or serious injury.

Valukas found that Millikin didn't know about pending lawsuits over the defect in models such as the Chevrolet Cobalt and Saturn Ion until a week before the company issued a recall on Feb. 13. Complaints tied to the ignition switch happened as early as 2004.

Barra fired several lawyers on Millikin's staff, including one of his top associates, Bill Kemp.

— By Nathan Borney and James R. Healey, Detroit Free Press, USA Today

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