General Motors legal team comes under fire at Senate hearing


General Motors Chief Executive Mary Barra and the company's general counsel Michael Millikin appear before a Senate panel in Washington on July 17, 2014. (Gary Cameron/Reuters)
July 17

General Motors chief executive Mary Barra on Thursday defended her efforts to transform the automaker’s internal culture amid a mounting safety crisis, rebuffing calls from several senators that she fire her top lawyer for his role in the company’s failure to respond to a deadly ignition switch defect for more than a decade.

GM has been consumed this year by troubles connected with the ignition switch problem, which has been linked to at least 13 deaths and 54 accidents. GM has recalled millions of cars, fired 15 employees, and faces a criminal probe by federal prosecutors in New York and inquiries from both houses of Congress.

The latest of these inquires came Thursday, when lawmakers summoned Barra and GM’s general counsel, Michael Millikin, to testify before a Senate subcommittee panel.

Senators on both sides of the aisle asked tough questions about the company’s handling of the safety crisis, directing much of their criticism toward Millikin and the company’s legal department. For about three years, Millikin has said, his subordinates kept him in the dark about possible punitive damages facing the company in connection with the ignition switch problem.

In a particularly tense exchange, subcommittee chairwoman Sen. Claire McCaskill (D-Mo.) demanded from Barra an answer on why Millikin had been allowed to keep his job, calling his lack of knowledge about the issue “either gross negligence or gross incompetence.”

But Barra rose to Millikin’s defense. “He is the person I need on this team. He had a system in place. Unfortunately in this instance it wasn’t brought to his attention,” she said.

Barra reiterated her support of Millikin after the hearing, telling reporters that she has no plans to heed the senators’ calls in asking for his resignation.

Barra, who was promoted to chief executive in January, has sought to change the company’s internal culture by implementing a number of reforms designed to increase transparency and attention to safety. The company also commissioned an internal report made public last month that said some GM officials knew about the ignition switch problem for years before it was publicly divulged in February, but found no wrongdoing by the company’s highest executives. The same report lambasted a corporate climate characterized by what it called the “GM nod,” in which a room of officials collectively nodded in agreement to a plan of action but never executed it.

On the heels of that report, Barra announced that she had fired 15 employees, more than half of whom were senior legal and engineering officials. Beyond this, she has largely retained the same circle of top executives who ran the company during the time it failed to respond to the ignition switch problem. Barra’s decision to keep them on board prompted criticism at Thursday’s hearing.

“I know that you have responsibility to choose your own team, but my view is the team has to change,” said Sen. Richard Blumenthal (D-Conn.). “Right now, the buck stops at an empty desk.”

Carl Tobias, a law professor at the University of Richmond, said he thinks Barra faces a difficult balancing act in remaking GM’s corporate culture while at the same time preserving the company’s institutional knowledge.

“You wouldn’t want to lose all the experience and expertise you have ... but at the same time you want to change the culture,” Tobias said. “Maybe they felt that the firing of the 15 [employees] would be enough, but it’s obviously not, at least for the senators and members of the public.”

In February, GM publicly divulged the safety problems with ignition switches in some models of its vehicles, ordering the first of a record-breaking series of recalls. Since the start of this year, GM has recalled more than 28 million vehicles in North America, many in connection with ignition switch issues.

The company also has agreed to dole out millions of dollars in a victims’ compensation fund, designed and administered by compensation specialist Kenneth R. Feinberg. The payouts will be largely restricted to victims and their family members affected by accidents in which airbags did not deploy in models of the 2.6 million small cars recalled in February. Several senators at Thursday’s hearing said the terms were too restrictive.

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