GM internal probe leaves critical questions unanswered

By Paul Lienert

DETROIT (Reuters) - General Motors Chief Executive Mary Barra for weeks has deflected critical questions about the automaker's handling of a recall of cars linked to at least 13 deaths, saying she would wait for the results of a months-long internal investigation.

But those findings, by GM's outside counsel Anton Valukas of Jenner & Block, proved less than definitive when released on Thursday.

From early in the investigation of the recall, a key question has been why the company redesigned the defective ignition switch linked to crashes but did not follow industry practise of changing the part number at the same time. That omission slowed accident investigations.

During April congressional hearings, Barra was unable to explain the decision. Valukas addressed the circumstances surrounding the part change in detail, and mainly blamed switch designer Ray DeGiorgio, who was among the 15 employees dismissed by GM(GM.N) after the probe. But the report did not explain the decision. On Thursday, Barra said she couldn't speculate on the reason.

The 325-page report, described by Barra as "extremely thorough and brutally tough," was particularly critical of GM's legal department but said GM's top lawyer, General Counsel Michael Millikin, did not know details of the switch until this year.

One attorney, William Kemp, who worked for years on the switch issue, was asked why he waited until this February to tell his boss about it. "He could not explain why he did not raise it with Millikin earlier and in hindsight says he probably should have," the report concludes.

Barra on Thursday said Millikin, 65, remains general counsel. Kemp is among the 15 GM employees dismissed in the wake of the investigation, according to a GM source familiar with the situation. GM declined to make Millikin available.

Also left unanswered was what role Millikin played in the internal probe, if any. When Barra announced the start of the investigation in early March, GM said that Millikin would co-lead it with Valukas. Some observers questioned whether there was a conflict of interest. On Thursday, a GM spokesman said the report and the investigation were solely the work of Valukas and declined to explain why the company earlier had said Millikin would take part.

The report did not disclose the number of legal settlements GM has reached with families of crash victims, nor did it offer a final count on fatalities. GM on Thursday said lawyer Kenneth Feinberg, who is designing a victims compensation fund for GM, would determine the number of deaths linked to the switch.

Valukas said that GM engineers and lawyers for years didn't connect the defective switch with the safety issues surrounding non-deployment of air bags in Chevrolet Cobalts and Saturn Ions. But the report did not say on what basis GM attorneys approved legal settlements with victims' families.

Valukas also raised questions about the whereabouts of key paperwork from GM engineers and switch supplier Delphi, both of which were required to sign off on the design of the original ignition switch in 2002. The investigation confirmed that the switch did not meet GM's own performance specifications, but it said the approval form was missing from the files of GM as well as Delphi. Delphi was obligated to keep a copy, the report said. Delphi did not respond immediately to a request for comment.

(Additional reporting by Ben Klayman in Detroit, Julia Edwards in Washington and Jessica Dye in New York; editing by Peter Henderson)