Because analysts can never get enough . . .
After the initial General Motors post in this corner, a loyal reader and former GC-type expressed a bit of disappointment that it did not tear into the General Counsel’s office like Mr. Plow on a snow-drifted highway. While it’s not the aim of this forum to take scalps, they do occasionally appear as a by-product of commentary on the targets, methodologies, and scopes of internal probes. This post takes the initial review of the GM internal investigation to the next step and gives a closer haircut to Michael Milliken without deviating from the purpose of this space.
The premise behind “The Most Disturbing Facet of GM’s Ignitiongate” was that it is inconceivable that worker bees, supervisors, and senior executives in any silo at GM – research and development, product testing, customer service, legal – could know that consumers had perished in their vehicles because of unknown causes and not considered whatever the issue was a safety risk. This especially includes the Law Department.
Recall that, according to Page 103 of the Valukas Report, awareness of the fatalities associated with the ignition switch failures hit GM legal when wrongful death litigation landed on its desks in 2006. At Page 104, it is made known that the lawyers in charge of safety issues and those tasked with product litigation both had reporting tie-ins at the General Counsel of GM North America. These divisions of labor were headed by top-notch in-house attorneys with a crossover of information to ensure that safety lawyers knew of litigation developments and that litigators knew of issues coming down the safety pike.
When it came to resolving lawsuits, GM had three tiers of settlement approval as described on Page 106, et seq. Cases valued at less than $100,000 could be settled on the authority of product liability staff attorneys. Those from $100,000 to $1.5 million (later $2 million) had to be approved by “The Roundtable”, a group of GM lawyers that was led by its Litigation Practice Area Manager. Settlement of cases valued between $2 million and $5 million had to be approved by the Settlement Review Committee, another group of GM lawyers that included the GC of North America and GM’s Counsel for Global Engineering Organization. Various ignition defect cases passed through each of these levels of review.
That’s a lot of supposedly smart people – lawyers – at Ground Zero and yet nobody sought or felt compelled to ring the alarm that an obvious safety issue of some sort was involved when GM customers were dying in GM vehicles under questionable Or at least to pass it up the chain of command to a C-suite that should know to do the right thing.
As the loyal reader referenced above so eloquently pointed out:
“GC 101: A general counsel that claims “I never knew” has failed, miserably. As a GC, you make it clear to your people that not sharing critical information will shorten their careers dramatically. In addition, you develop redundant sources so that if one of your subordinates does not follow Dictate #1 above, you find out anyway. And then you find out why you weren’t told. I understand that there has been a lot going on at GM, but not knowing information of this magnitude is simply inexcusable. You either address the span of control or bandwidth or “tell me the bad news or else” issue, whatever you want to call it, or you need more or different warm bodies”.
Dale Buss over at Forbes detailed others seeing it the same way in “Barra is Protecting GM Top Lawyer Milliken – But Should She Be?” where he wrote:
“Mary Barra may have developed a blind spot with her resolute defense of General Motors chief legal counsel in the wake of Michael Millikin’s suspect role in the company’s handling of safety recalls as GM’s approach became sclerotic and even irresponsible over the years.
That’s the view of some expert observers with legal and GM backgrounds. They believe Barra should be nudging Millikin to fall on his sword — into resignation or “retirement” — instead of stoutly defending a performance by her 65-year-old chief counsel that, at best, suggested awful things happening on his watch and, at worst, may have made him at least negligent in some of the most inexcusable aspects of the company’s continuing recall crisis.
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And Sen. Dean Heller (R., Nev.) told The Wall Street Journal: “I was surprised at the bear hug that [Barra] gave Millikin in that hearing. Even if he didn’t know, he had an obligation to know.” Sen. Richard Blumenthal (D., Conn.) told the newspaper that Barra has “a blind spot” in regard to Millikin.
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[An] attorney with long ties to GM, added that “it looks like the secretive nature of the legal department played a big role in the delay. Even if [Millikin] didn’t know, he should have known. He was in charge of a department that screwed up.”
And that’s but one of a number or avenues that this internal investigation should have driven down to its very end: What did Michael Milliken know and when did he know it? Or, if he didn’t know anything about the mystery crashes and mystery deaths, why not?