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Latest Federal Probe Into Delayed Ignition Switch Recall Centers On GM’s Legal Department

(Paul Bica)- Latest Federal Probe Into Delayed Ignition Switch Recall Centers On GM’s Legal Department

By Ashlee Kieler

We know, we know: Broken record here, but the legal woes for General Motors are far from over and new probes are announced every day. Now federal prosecutors are looking into whether the car manufacturer’s legal department concealed evidence that could have led to an earlier recall of vehicles with faulty ignition switches that ultimately led to at least 13 deaths.

Citing people familiar with the matter, The Wall Street Journal reports that the Federal Bureau of Investigation and the U.S. attorney’s office in Manhattan are in the early stages of an investigation regarding whether employees tied to the company’s legal department contributed to the 11-year delay of the recall by hiding evidence of an issue.

The people cited by the WSJ say the review of current and former company lawyers is part of a larger criminal investigation into possibly misleading statements the company made in reference to the ignition switch used in millions of vehicles.

The investigation comes after GM released an internal report earlier this summer that found the company’s lawyers failed to alert other managers to lawsuits against the company that could have addressed accidents where airbags did not deploy.

According to the internal report, members of GM’s legal staff were repeatedly warned, starting in 2010, that GM could face costly punitive damage awards over failure to address safety problems.

Following the internal probe, GM dismissed 15 employees, including several lower level lawyers, citing their failure to take action.

During a July senate hearing, Michael Millikin, general counsel for the manufacturer, told lawmakers that “we had lawyers at GM who didn’t do their jobs” and said they are no longer with the company.

Lawmakers weren’t exactly happy with that answer. Missouri Sen. Claire McCaskill voiced concern that despite his employee’s failures, Millikin was able to keep his position within the company.

Since then, at least three additional high-level GM attorneys have been dismissed and the company hired outside representation to review its litigation process. Millikin continues to work as general counsel for the company.

GM’s legal department is just one area in which prosecutors are looking for possible criminal liability, the WSJ reports. In June, a Congressional investigation into the ignition debacle indicated that at least one current GM Vice President was made aware of the problem as early as 2005.

The WSJ reports that probes against in-house lawyers don’t occur often because of complicated attorney-client privileges and the difficulty in proving liability. Still, similar cases have led to decisions and fines for companies in the past.

In March, Toyota reached a deal to pay $1.2 billion to settle fraud charges after a four-year criminal probe into the company’s efforts to conceal safety issues related to unintended acceleration.

Those familiar with the situation between GM and the new legal investigation say prosecutors could try to charge current and former GM lawyers and others with mail and wire fraud – the charges used in the Toyota case.

The latest investigation is in the early stages and could end without any charges being brought against the legal department or GM.