Nov 10, 2014 8:30 AM

GM ordered switches nearly 2 months before recall

The Associated Press

DETROIT (AP) Emails showing that General Motors ordered a half-million replacement ignition switches nearly two months before telling the government of a safety recall will be heavily scrutinized by federal prosecutors, who are investigating GM's conduct, according to legal experts.

The email chain, released Monday by an attorney suing GM, again raises questions about how forthcoming GM has been with safety regulators and lawmakers, as well as a GM-funded investigation into the defective switches by former U.S. Attorney Anton Valukas.

The chain of emails from December through February shows that a contract employee for GM inquired about the parts on Dec. 18, 2013, and ordered them from Delphi the following day, in preparation to replace parts on 500,000 to over 700,000 vehicles. The cost was estimated at nearly $3 million.

Yet GM did not report a safety defect to the National Highway Traffic Safety Administration until 51 days later, on Feb. 7, 2014. Federal law requires automakers to tell the agency about defects within five business days of discovering them.

The U.S. Attorney's office in Manhattan is investigating potential criminal actions by GM in its handling of the recall of 2.6 million older-model small cars nationwide. The faulty switches are responsible for at least 32 deaths and hundreds of injuries. The switches can slip out of the run position, causing engines to stall unexpectedly and disabling air bags. GM has admitted knowing about the problem for more than a decade.

The emails muddy the timeline GM has given regarding the recall. The part order came just after a Dec. 17 meeting of a three-executive GM panel that decides if cars should be recalled. But the Valukas report said that although the committee heard a presentation from GM investigators seeking to recall the ignition switches, no decision was made that day. GM says it didn't determine that the cars should be recalled until Jan 31.

Also, the parts order was not mentioned when CEO Mary Barra subsequently testified before Congress. Barra has said she first found out about the switch problem in late December and the decision to issue a recall on Jan. 31. GM says it is standing by Barra's previous statements.

The emails also could lead to further congressional hearings on the matter with Barra being called to Washington again.

Sen. Richard Blumenthal, D-Conn., a member of the Senate panel that has investigated GM's handling of the faulty switches, said Monday that Barra "should be called back."

"I believe strongly that she should be given the opportunity to explain these contradictions," Blumenthal said in a telephone interview. The newly released emails, he said, "seriously undercut the credibility of the Valukas report and challenge the GM timeline."

Rep. Diana DeGette, D-Colo., who sits on the House subcommittee that also has probed the switch recall, said GM failed to inform federal safety regulators of its actions and to disclose them to Congress.

"Once again, the leadership and integrity of GM's senior managers deserve the strictest scrutiny," she said.

Federal prosecutors are looking into whether GM misled safety regulators. Criminal charges against the company and employees are possible. GM has already admitted violating the law, paying a $35 million fine and agreeing to strict federal oversight.

The Justice Department will have a "field day" with the emails, matching up dates against the timeline from Valukas' report and documents filed with NHTSA, looking for conflicts, said Peter Henning, a former federal prosecutor who now is a law professor at Wayne State University in Detroit.

Someone higher up in GM, he said, would have had to authorize the parts order, and investigators will want to know who that was. "That's not coming out of petty cash. Even for a company like GM," Henning said.

Also, Henning said the company wouldn't order that many parts unless it knew a recall was coming. The documents also raise questions about Valukas' report, because GM said he was given unfettered access to company documents, Henning said.

Texas attorney Robert Hilliard, who released the emails, said GM should have told the government and warned its customers as soon as it knew about the problem. For his clients alone, a warning at the time of the parts order could have prevented one death and 85 injuries, Hilliard said.

He contends that Barra, who was head of product development and purchasing before becoming CEO, should have known about an unbudgeted order of 500,000 replacement switches.

Jere Beasley, another lawyer who also received the emails, said Delphi produced them after Beasley and associated lawyers agreed to drop the company as a defendant in the ignition switch cases.

Delphi and the Justice Department would not comment.

Valukas issued a statement standing by his report and saying that to his knowledge GM gave him access to all the information it had on repair options. But it didn't directly address whether or not he received the parts-ordering emails.

GM said in a statement the emails are "further confirmation" that its system needed to be reformed, which it has done. The company also said it is standard practice to start ordering parts before a recall determination is made.


AP Business Writer Marcy Gordon contributed to this report from Washington.


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