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In-House Attorney and Lehman Investigator Included in GM Recall Probe Team

March 11, 2014

General Motors recently announced that it hired Anton ‘Tony’ Valukas to be part of the team in charge of the internal investigation on how the company dealt with the ignition-switch failure that resulted in 13 traffic deaths.

Valukas, who is chairman of the Jenner & Block law firm in Chicago, was appointed as examiner in the Lehman Brothers Holdings bankruptcy by the U.S. Justice Department in 2009. His investigation resulted in what the press called the “Valukas Report,” a 2,200-page account wherein the reasons for the collapse of the financial services firm were detailed. Valukas was also a former United States Attorney.

Valukas would be leading the internal probe team and will be working alongside the automaker’s general counsel, Michael Millikin, to find out why a recall on the affected vehicles was not issued several years earlier. Aside from attorneys from Jenner & Block, GM also hired attorneys from law firm King and Spalding to join the investigating team.

GM is conducting an internal investigation as the National Highway Traffic Safety Administration (NHTSA) does a probe of its own regarding the actions performed by the company to address engineering issues and consumer complaints since 2004. The NHTSA gave GM until April 3rd to answer all the questions included in the 27-page order it sent on March 4th.

If the NHTSA discovers in its probe that GM did not issue a recall even when it knew the vehicles were defective, the agency could fine the automaker up to $35 million. The NHTSA could also file criminal charges.

Recent reports about GM missing the early warnings can further put CEO Mary Barra under fire. As Automotive News reported, two of the automaker’s engineers discovered ten years ago that the Saturn Ion’s ignition switch was weak and situated too low on the steering column; the position is low enough for the driver’s knee to hit it and as a result, switch off the vehicle.

One of the engineers noted this problem on January 2004 for GM’s Company Vehicle Evaluation Program. The engineer wrote, “This is a basic design flaw and should be corrected if we want repeat sales.”

The engineer’s feedback should have resulted in the immediate improvement of the vehicle, but GM did not address the flaw. Rather, it had the same problematic switch installed on the small car it launched the same year—the Chevrolet Cobalt. The company used the defective switch until 2006, when it was redesigned. In 2009, the ignition key was redesigned for the 2010 Cobalt, which was the vehicle’s last model year.

Another thing that could compromise GM’s reputation is the fact that they treated earlier complaints as an issue of customer satisfaction and not an issue of safety. The automaker put the blame on the driver instead of the vehicle.

In October 2005, a Cobalt owner from Gettysburg, Pennsylvania complained about the car. In GM’s complaint-tracking system, one will find this entry on the said complaint’s follow up: “There is nothing mechanically wrong with the vehicle. It is the customer’s driving habits. They hit the ignition key slot.”

GM was reported to have purchased back the Cobalts of customers who have complained about the problem of frequent stalling that the dealers could not solve. GM was said to have done this 12 times.

Barra assumed the top position at GM just earlier this year after spending three years as its head of product development. She said she only learned about the problem shortly before the first stage of the recall was issued in February.

Photo credit: Katrina J Wiese/ Flickr/ CC BY-SA

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