Barra's personnel moves questioned
THE GM RECALL

Top lawyer keeps pall over GM

Barra's personnel moves questioned

GM CEO Mary Barra's allegiance to chief counsel Michael Millikin, left, and other controversial personnel moves could impede her ability to fully clear the cloud hanging over the company.

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Mary Barra, who went to Capitol Hill nearly four months ago only to be told by one lawmaker that she didn't "know anything about anything," made a more favorable impression this time.

Senators twice told the General Motors CEO last week that she has "stepped up" in her handling of GM's ignition-switch crisis. They seemed satisfied with her early progress in fortifying GM's safety processes and her vows to change the company's culture.

Sen. Claire McCaskill, D-Mo., the Senate oversight panel chairman who pilloried Barra in the first go-round, said Barra has shown "courage and conviction" and "confronted the problem head on."

The changing perception among some of her toughest critics suggests that Barra is maneuvering GM out of the worst of the crisis. But the praise came with a scorching indictment of her decision not to fire chief counsel Michael Millikin, who was drilled by lawmakers for not having known what several high-ranking lawyers in his department had known for years: that a faulty GM ignition switch was suspected in a string of deadly accidents.

Barra's allegiance to Millikin, 65, and other controversial personnel moves could impede her ability to fully clear the cloud hanging over GM. They're likely to amplify claims that the 33-year GM veteran may not be enough of a change agent to lead a transformation of the company's culture.

"It is hard for me to imagine that she can truly get on the other side of this until the general counsel is changed," McCaskill told the St. Louis Post-Dispatch after the hearing.

A different side of Barra


Barra's strident defense of Millikin showcased a different side of her persona as chief executive, which until now has been defined by apologies to victims and deference to lawmakers as she seeks to reassure them about the company's direction.

"I respectfully disagree," Barra responded to McCaskill's assertion that Millikin should have been added to the list of 15 GM employees fired last month after an internal investigation into why the automaker delayed the recall of 2.6 million Chevy Cobalts and other compact cars with the faulty switch.

Millikin is "a man of incredibly high integrity," Barra said. "He's the person I need on this team."

Parks: Promoted to vice president of global product programs for GM.

Barra has the backing of GM Chairman Tim Solso, who told The Wall Street Journal after the hearing that the victim compensation program being overseen by lawyer Kenneth Feinberg was Millikin's idea.

"It would be a huge mistake if Mike were to leave the company right now," Solso told the paper.

Barra showed faith in Millikin even before the internal investigation, which ultimately prompted the ouster of at least five lawyers on his staff. When GM commissioned the probe in March, the company said it would be co-led by Millikin and Chicago lawyer Anton Valukas.

GM spokesman Jim Cain said that the 325-page report released in June was solely the work of Valukas' team. "We wanted to make sure the organization knew the seriousness of this situation, which is why Mike Millikin was involved," he said in a statement. "But Mr. Valukas had the latitude to do this investigation completely independently."

Barra last month decided not to discipline another executive with whom she has worked closely, head of product programs Doug Parks, despite Valukas' findings that Parks knew in 2005 about problems with the car's ignition switch and participated in discussions about potential fixes. Engineers eventually decided to do nothing.

At least one engineer on the Cobalt team who was involved in those same deliberations, Gary Altman, was among those let go -- but not Parks, who was Barra's top lieutenant during her time as GM's global product chief, from 2011 to 2013. She quickly promoted him to his current post as vice president of global product programs.

Millikin: Subordinates failed to bring forward key information when they should have.

Lawmakers unconvinced


While senators were appeased by Barra's progress on safety, they were far less convinced by Valukas' finding that there was no cover-up of the deadly defect.

Panelists grilled Millikin over GM's evasive response to federal regulators' requests for more information about fatal crashes that were ultimately linked to the ignition switch. GM either opted not to respond to inquiries from the National Highway Traffic Safety Administration about what caused the crashes or said it didn't know how they happened, even after its engineers had studied them and reached some conclusions, according to documents obtained by The New York Times.

That revelation, which was not mentioned in the Valukas report, only sharpened the scrutiny on Millikin and his staff. Sen. Richard Blumenthal, D-Conn., said he believes an ongoing Department of Justice investigation will find evidence "of cover-up, concealment, deceit and even fraud" on the part of GM's legal department.

Millikin, who said he didn't find out about the switch problem until GM decided to recall the cars early this year, acknowledged that subordinates failed to bring forward key information when they should have. "That's very troubling to me," he said.

He said his staff has since been instructed to inform him personally of any settlements or pending trials involving a death or serious injury so GM can act more quickly on any unsettled safety matters.

Previously, his subordinates had the authority to settle cases for as much as $5 million without going to their boss, according to the Valukas report.

Meanwhile, NHTSA's role in failing to flag the ignition-switch defect sooner remains on the table for lawmakers. McCaskill said she will call another hearing to examine the agency's role.

Supplier Delphi Automotive, on the other hand, seemingly was absolved of blame. In the company's first substantive public comments on the matter, CEO Rodney O'Neal, 60, told lawmakers that GM approved the faulty switch that Delphi manufactured, and bore responsibility for its performance, a position that Barra endorsed.

The panel's questions for Barra were far less contentious than in past hearings, with some squarely in her comfort zone. For example, Barra was asked to outline specifics about how GM is improving its safety recalls, and the reasons behind its unprecedented onslaught of 54 recalls covering nearly 29 million vehicles globally so far this year.

Barra explained that GM is being proactive in its approach to recalls, in some cases calling vehicles back for repairs without a single report of a problem from the field. She noted that four of GM's recalls this year covered fewer than 100 vehicles.

"That's great," McCaskill said in response. "I appreciate that."

Nick Bunkley and Ryan Beene contributed to this report.

You can reach Mike Colias at mcolias@crain.com.

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