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House Panel to Probe GM Recall of Vehicles Over Switches

A House panel will investigate the response of General Motors Co. (GM) and U.S. regulators to consumer complaints about ignition-switch failures that led to the recall of 1.6 million vehicles and are linked to at least 13 deaths.

The House Energy and Commerce Committee will explore whether the automaker or the National Highway Traffic Safety Administration missed “something that could have flagged these problems sooner,” Representative Fred Upton, the panel’s chairman, said in a statement tonight.

“If the answer is yes, we must learn how and why this happened, and then determine whether this system of reporting and analyzing complaints that Congress created to save lives is being implemented and working as the law intended,” said Upton, a Michigan Republican, who said the committee would hold a hearing in the coming weeks.

The issue is emerging as the first major test for GM Chief Executive Officer Mary Barra, who was promoted to replace retiring CEO Dan Akerson two weeks before an internal company decision on Jan. 31 to do a recall. She is personally leading senior executives who are monitoring progress on the recall, which includes Chevrolet Cobalt and Pontiac G5 small cars.

GM said earlier today it hired Jenner & Block LLP Chairman Anton Valukas, who served as a U.S. Justice Department-appointed examiner of the downfall of Lehman Brothers, to lead an internal company inquiry into the handling of the ignition-switch flaw.

The company probe is being conducted jointly by a team led by Chicago-based Valukas and GM General Counsel Michael Millikin, the automaker said in a statement. Attorneys from the law firm King & Spalding are also part of the team, GM said.

NHTSA Query

The internal company investigation is running parallel to a query from NHTSA on what steps the company took to investigate engineering concerns and consumer complaints dating from 2004. Detroit-based GM has until April 3 to answer specific questions in a 27-page order the agency issued March 4.

“We are fully cooperating with NHTSA and will do so with the Committee, too,” GM spokesman Greg Martin said in an e-mail tonight. “We welcome the opportunity to help both parties have a full understanding of the facts.”

GM last month said heavy key rings or jarring can cause ignition switches on some Chevrolet, Pontiac and Saturn vehicles to slip out of position, cutting off power and deactivating air bags. GM has linked the defect to at least 23 crashes, including the 13 deaths.

The auto-safety regulator could fine GM as much as $35 million, which would be the most ever by the U.S., if it finds the automaker didn’t pursue a recall when it knew the cars were defective. The agency can also seek criminal charges.

‘Without Hesitation’

The company’s reputation may be driven by how it responds, Barra said in a March 4 note to employees.

GM “has acted without hesitation” to address the recall in the past few weeks, Barra said in a note on a website last week for employees. “We have much more work ahead of us.”

The initial recall on Feb. 13, covering 778,562 Cobalts and G5s, was widened less than two weeks later to more than 800,000 additional vehicles. Those include 2003-2007 Saturn Ions, 2006-2007 Chevrolet HHRs, 2006-2007 Pontiac Solstices and 2006-2007 Saturn Skys. Other models affected are the 2005-06 Pontiac Pursuit sold in Canada and the 2007 Opel GT sold in Europe.

GM North America President Alan Batey said in a Feb. 25 statement expanding the recall to the Saturn Ion and other models that the company’s “process employed to examine this phenomenon was not as robust as it should have been.” GM is preparing a second timeline related to that recall expansion.

10-Year Timeline

Valukas, 70, was the U.S. attorney in Chicago from 1985 to 1989. He also served as special counsel to the City of Chicago investigating the city’s health-care system and in 1993 was chairman of the Illinois Governor’s Task Force on Crime and Corrections, which led to prison reform legislation, the law firm said in his biography on its Web page.

NHTSA is seeking information on 107 separate questions about the company’s steps leading to the recall, including the 10-year timeline the company provided regulators Feb. 24.

The agency said it wants names and correspondence from any employee involved in the company’s attempts, going back to 2004 to investigate and isolate ignition-switch failures. It asks for details on why engineering fixes proposed in 2004 and 2005 weren’t implemented.

NHTSA also said it 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. U.S. auto-safety regulators were told by a research team in 2007 of a possible link between defective ignition switches and air bags not deploying.

Service Bulletin

GM described the issue in a technical service bulletin to dealers the previous year that the automaker said resulted in repairs for 474 customers. NHTSA didn’t start a defect investigation at the time and GM didn’t issue a recall until this year.

NHTSA is also facing questions about why more wasn’t done to address the Cobalt safety questions in 2007 and earlier.

Joan Claybrook, a former NHTSA administrator and longtime consumer advocate who has been critical of GM’s response, earlier today asked congressional leaders for hearings on how GM and the agency handled the Cobalt recall. She was joined by four advocacy groups -- the Center for Auto Safety, Advocates for Highway and Auto Safety, the Consumer Federation of America and Consumers Union.

“General Motors seemingly ignored the problem for nearly a decade and failed to take any corrective action despite the mounting number of deaths and injuries related to defective ignition switches,” the groups said in letters to Upton and to Senate Commerce, Science and Transportation Committee Chairman Jay Rockefeller, a West Virginia Democrat.

To contact the reporters on this story: Jeff Plungis in Washington at jplungis@bloomberg.net; Jeff Green in Southfield, Michigan at jgreen16@bloomberg.net

To contact the editors responsible for this story: Jamie Butters at jbutters@bloomberg.net; Bernard Kohn at bkohn2@bloomberg.net Michael Shepard

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