GM CEO Ed Whitacre has appeared in several controversial commercials for the automaker, the latest triggering a Congressional investigation.
Two top Republican lawmakers have accused General Motors of destroying documents involved in a government investigation related to its 2009 federal bailout.
In a letter sent to GM CEO Ed Whitacre Jr., California Congressman Darrell Issa and Ohio’s Jim Jordan claim the carmaker has been destroying e-mails, documents and other records related to a recent TV commercial in which GM announced it was paying off its government loan.
In fact, the automaker used surplus funds from its $50 billion federal bailout to pay back $6.7 billion considered a loan from the U.S. Treasury. The rest of the money was provided as an equity stake in post-bankruptcy General Motors, and any payback won’t take place until after the company’s planned public stock offering – which likely won’t take place until 2011, at the earliest.
The commercial generated extensive blowback for GM, and has triggered investigations on Capitol Hill.
“In light of these ongoing investigations, we are deeply disturbed to learn that GM is engaging in a continuous process of destroying documents to deliberately prevent (lawmakers) from obtaining information,” the two Congressman stated in a letter first obtained by the Detroit News. Issa and Jordan went on to warn that the further destruction of documents would be considered “evidence of criminal misconduct,” something they said they would take to the Justice Department.
A spokesman for GM responded by stating that the maker’s policies “comply with the law.”
Though former President George W. Bush provided some initial funds, in late 2008, to keep GM alive, Congress ultimately rejected a formal bailout of the company. Bush’s successor, Pres. Barrack Obama, eventually provided help using the so-called TARP program Congress approved for bailing out the bank and financial services industry.
The government’s involvement with GM – it holds a controlling 61% stake in the automaker – has become increasingly polarized, even though CEO Whitacre was one of the biggest fundraisers for the Bush White House run. That raises questions about whether the GM investigations, and the letter from two GOP Congressmen, are simply meant to inflame the debate or serve as valid oversight.
During a recent hearing on Capitol Hill, GM Attorney Lucy Clark Dougherty acknowledged that the automaker has a policy of destroying electronic communications after 60 days, with no backups made. During the session, Professor Fred Cate, a communications expert from Indiana University, noted that most companies hold electronic documents for six months – and indefinitely should there be pending litigation. He described GM’s lack of an electronic backup system as “absolutely unique.”