New e-mails uncovered in the GM ignition-switch scandal suggests that the company has misled victims and their families, and perhaps the court, as to when they knew of the defect. The shift in the timeline also calls into question whether the Obama administration knew about the problem before Treasury dumped their GM shares just nine days before an “urgent” order for a half-million replacement switches was sent out. WJZ in Baltimore aired this report last night:
The emails suggest that GM leaders knew about the deadly ignition switch defect involving millions of cars months before they notified the federal government. …
General Motors issued a massive recall for faulty ignition switches which can cause cars to suddenly turn off, disabling airbags on February 13. But newly released emails reveal two months before the recall, on December 18, a GM contract worker ordered half a million replacement ignition switches from parts company Delphi to support an “urgent field action.”
The next day, another email again calls the situation urgent, saying “need to start seeing shipments ASAP.”
Bob Hillard, an attorney representing GM victims in a lawsuit, discovered the emails. “This is absolutely the most explosive piece of evidence I’ve seen and I’ve been inside these GM cases since day one,” he said.
December 18th? That’s an interesting date. That’s just nine days before Treasury announced that it had sold off the remaining shares of GM stock it acquired during two successive bailout efforts and the politically-driven restructuring that left senior investors and Delphi retirees out in the cold. Treasury ended up getting back $39 billion from all sales of GM stock, from a total investment of around $50 billion. Treasury argued at the time that the overall loss paled in comparison to the loss the US would have suffered in ” lost jobs, lost tax revenue, reduced economic production, and other consequences” of a collapse of GM.
One has to wonder even more about the timing of the sale of these shares, which brought $9.2 billion to Treasury. The e-mail isn’t an alert about a potential defect from an engineer, but a parts order for an already-planned “urgent field action” that required immediate attention. The decision on the “urgent field action” would have preceded any parts order, which means GM knew about an important ignition-switch defect prior to this. Did GM and the government know about the deadly defect before the Obama administration dumped its shares — and trade with that insider information without disclosing the specific known risk to shareholders? The report also notes that GM was required to notify the National Highway and Transportation Safety Administration within five days of a defect discovery. Did the NHTSA also know about this and keep quiet to allow investors to get hoodwinked by Treasury?
Had this kind of trading taken place between private investors, the SEC would be all over the sellers and the corporation involved. Congress needs to take a very close look at this — and perhaps the newly-Republican Senate will do so after January.