Government Motors .... Just Wondering

     General Motors (GM) is in the news these days for safety issues surrounding an ignition defect "now linked to 12 deaths and at least 31 accidents over the past decade."  GM first reported publicly its own safety investigation and recall last month (February 2014), though there have been lawsuits over the years for several of the accidents.

    While we have no opinion on GM culpability and believe it prudent to wait for results of Congressional inquiries and other external and internal investigations, we wonder what it means that the U.S. government owned General Motors for a substantial and critical time period in this tragic story.

    The government injected $49.5 billion into GM in 2009 as part of the automaker's bankruptcy.  As a result, the U.S. owned 61% of GM.  Simply put, the government bought and owned General Motors.  The government reduced its position to 26% in late 2010, reduced again to 19% in late 2012, and sold down to ZERO in DECEMBER 2013.

    Now let's look at GM's chronology of its internal investigation thus far.  In the years 2005, 2006, 2007, 2011, 2012, and 2013 there were important developments and milestones in GM's findings and research into the ignition defect.  The U.S. government was the largest owner of GM in three of these critical years.  Of course, the government was also 61% majority owner for a period in which tragic car accidents continued.



CORPORATE GOVERNANCE

                                              SHAREHOLDER RESPONSIBILITY

                                                                                                            SECURITIES LAWS

We pose a few obvious, but interesting, questions:

*    What is the role of the Board of Directors?  Did the GM Board discuss the ignition defect safety investigation over the years?  In particular, did the Board members - including those installed by the U.S. government - perform their fiduciary and ethical responsibilities?

*    What is the responsibility of the U.S. government in its role as majority owner (2009-2010) and then dominant owner (2010-2013)?

*     As majority owner and dominant owner, did the government disclose all it knew about the evolving internal investigation as it sold large chunks of equity to the public?

*    Is the timing of GM's public announcement (February 2014) of this high-profile safety defect soon after the U.S. government's sale of its last holding in the company (December 2013) purely coincidental?