GM Ignition Probe Puts Lehman Investigator on a Deadline

General Motors Co. (GM) just gave attorney Anton Valukas a tall order and a short deadline.

GM said yesterday it had hired Valukas, who probed Lehman Brothers Holdings Inc.’s 2008 downfall, to help lead an internal investigation into design failures tied to at least 13 deaths dating back a decade. The National Highway Traffic Safety Administration has given GM, the biggest U.S. automaker by sales, until April 3 to say why it took so long to announce a recall of 1.6 million vehicles to fix the flaw.

Valukas will help with the NHTSA inquiry, according to GM, as well as run his own internal probe, for which GM hasn’t stated a deadline. He declined to comment on his hiring.

In Valukas, GM selected an attorney who battled Chicago corruption as a federal prosecutor in the 1980s, has defended big companies -- including GM -- and was appointed by the Justice Department to lead hundreds of attorneys in investigating the collapse of Lehman, the biggest bankruptcy in U.S. history. The 70-year-old chairman of Chicago-based Jenner & Block LLP is known for demanding thorough work on a tight schedule and having little patience for those who fall short, say attorneys who have worked with him.

It will take some hasty archeology to dig through the layers of GM history that have accumulated over the past decade -- a period that spanned five chief executives, a government-financed bankruptcy reorganization, a name change and forgiveness of past legal obligations. Valukas is tasked with figuring out what went wrong with vehicles that were developed more than 10 years ago -- including Chevrolet Cobalts and HHRs, Pontiac G5s and Solstices and Saturn Ions and Skys -- and how the company handled complaints that GM has said started arriving as early as 2004.

‘Witch Hunt’

“It’s an elaborate system to understand and evaluate,” said Tom Stallkamp, who was president at Chrysler when it was part of DaimlerChrysler AG and who left the automaker in 1999.

“There’s already a sense that someone’s going to get in trouble for this,” Stallkamp said. “This guy is going to be looked at as doing a witch hunt, and so I don’t think he’s going to have an easy job.”

In announcing its recall last month, GM said the ignition switches in some models could slip out of position when jarred or when a key attached to a heavy ring pulled it out of position. That, in turn, could cut power and deactivate air bags.

Valukas is handling the investigation with GM General Counsel Michael Millikin, the automaker said in a statement. Attorneys from the law firm King & Spalding LLP are also part of the team, GM said.

Operation Greylord

Valukas has been at Jenner & Block since 1976, with the exception of a four-year stint as U.S. attorney in Chicago starting in 1985. As the top federal prosecutor in northern Illinois, Valukas continued his predecessor’s investigation of judicial corruption -- dubbed Operation Greylord -- that led to 92 indictments, including those of 17 judges, Valukas’s firm said.

Valukas has represented companies in industries including finance, airlines and biotechnology.

In 2009, as the court-appointed examiner in the Lehman bankruptcy, he managed about 200 lawyers who examined 6 million documents and interviewed 250 people, said Robert Byman, a partner at Jenner & Block and Valukas’s chief of staff during the Lehman investigation. The team produced a 2,200-page report, the product of 15 months of work, which faulted executives for negligence and certifying misleading financial statements. No Lehman executive was prosecuted.

Amid the probe, Valukas maintained his calm, said Weil Gotshal & Manges LLP’s Harvey Miller, who was Lehman’s lead bankruptcy lawyer. “He organized his team quickly, developed a plan of action and proceeded deliberatively in an initial environment that bordered on chaos,” Miller said.

Hollinger Fraud

At Jenner & Block, Valukas represented David Radler, a former lieutenant of Conrad Black at Hollinger International Inc. who pleaded guilty to defrauding the newspaper publishing company. He won dismissal of a false-claims case against Biogen Idec Inc., the maker of a cancer drug allegedly promoted for off-label use. He defended American Airlines (AAL) against claims arising from the November 2001 crash of Flight 587 in Queens, New York, which were ultimately settled.

Valukas is no stranger to Detroit-based GM. Before its bankruptcy reorganization, old GM hired him to help during a four-year investigation by the Securities and Exchange Commission of its method of accounting for matters including pension obligations. The regulator ended its probe in 2009 by faulting GM for inaccurate bookkeeping and misleading investors, though without fining it or alleging intentional misconduct or fraud.

Ignition Switch

GM said it is fully cooperating with NHTSA’s probe on what steps the company took to investigate engineering concerns and consumer complaints. NHTSA wants the automaker to expand on a timeline it gave the regulator showing events at GM from the time it received the first field reports of ignition switch issues and issuing the recall in February.

NHTSA has asked for details on why the company didn’t implement proposed fixes, such as a different switch opening floated in 2005 and a re-engineered switch in 2006. The agency wants to know what happened after a 2007 meeting in which regulators and GM discussed an air-bag failure after a Cobalt lost engine power.

“It looks like they had some sort of process here that decided that it wasn’t a big issue, Stallkamp said. That’s what this guy has to figure out,” and at what levels the decisions were made, he said.

Byman, the Jenner & Block partner, said that even with the Lehman probe’s generous resources and time frame, Valukas set strict deadlines and didn’t want to waste time interviewing the same person twice.

Quarterback, Receivers

He surrounds himself with people who get the job done, Byman said. Byman recalled that when he organized touch football games for the firm’s lawyers in the 1970s, Valukas would play quarterback. Teammates who dropped passes, Byman said, wouldn’t soon get another chance. As the number of potential receivers dwindled, the defense would anticipate Valukas’s next pass and intercept it, Byman said.

“If you drop the ball with him, he’s not going to go back to you until he has to,” Byman said. “If you don’t let him down, he keeps going back to you.”

To contact the reporters on this story: Patrick G. Lee in New York at plee315@bloomberg.net; Linda Sandler in New York at lsandler@bloomberg.net; Jeff Green in Southfield, Michigan at jgreen16@bloomberg.net

To contact the editors responsible for this story: Michael Hytha at mhytha@bloomberg.net; Andrew Dunn at adunn8@bloomberg.net; Jamie Butters at jbutters@bloomberg.net Jeffrey D Grocott

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