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Welcome
AIAG Governance & Ethics
Professional Series
Tanya Bolden Director, Corporate Responsibility Products & Services
Welcome
AIAG Governance & Ethics Professional Series
• This inaugural event launches a new issue-area focus for CR at AIAG
• Companies face many governance & ethics challenges in today market place and for smaller companies the access to governmental 'insiders' is rare
• Today you will have the opportunity to network with and hear from Washington DC attorneys' that have experience working with NHTSA, NSA and the US Dept of Justice on legal matters related to the automotive industry
AIAG: at-a-glance
• Originally • Founded in 1982 by GM, Ford, Chrysler, VW and a few key suppliers • Created a unique neutral and legal forum • Focused on regaining competitiveness
• Today • 1300 member companies & growing • Focused on Mitigating Risk and Managing Uncertainty • Driving pervasive access and utilization of the solutions developed by
the industry, for the industry
• Our Strength • 900 Industry volunteers and 270 companies providing expertise • Over 60 active projects and committees • Subject matter experts on staff
Corporate Responsibility
• Global Chemical Management and Reporting
• Supply Chain Sustainability Programs
• Environmental Sustainability
• Greenhouse Gas and Energy Management
• Health Care Value
• Conflict Minerals Reporting & Best Practice
• Sustainability Benchmarking
Quality
• Management Systems (TS, VDA)
• Auditor Training/Certification
• Automotive- Quality Core Tools
• Special Processes
• Tier-1 CSR Alignment
• Warranty Management
• Lean Product Development
• Long-term Data Retention
• Model Based Enterprise (MBE)
Supply Chain
• Damage Claims
• OEM Transportation Optimization
• Finished Vehicle Logistics
• Materials Management
• MMOG/LE
• Customs and Security
• C-TPAT Reporting
• Export Compliance
• Packaging & Container Management
Areas of Expertise
Interface & Leadership
Tom Lake Vice President
North America Purchasing Honda North America, Inc.
Robert Young Vice President – Vehicle Parts & Materials
Toyota Motor Engineering & Manufacturing North America, Inc.
Hau Thai-Tang Group Vice President
Global Purchasing Ford Motor Company
Thomas Finelli Vice President
Purchasing & Supplier Quality Fiat Chrysler Automobiles N.V.
Steven Kiefer Vice President
Global Purchasing & Supply Chain General Motors Company
Agenda
Panelist Discussion - 3:30 pm
Antitrust Enforcement Everywhere-Increasing Cooperation Across Borders
Cybersecurity and Privacy in Today's Digital World
New Enforcement Priorities at NHTSA: How have they changed and what does it mean for global supply chain management?
Q & A - 4:30 pm
Reception- 5:00 pm
Speakers
Mark W. Ryan Partner, Mayer Brown
former Director of Litigation, Antitrust Division, US Department of Justice
Erika Z. Jones Partner, Mayer Brown
former Chief Council, National Highway Traffic Safety Administration (NHTSA)
Rajesh De Partner, Mayer Brown
former General Counsel, US National Security Agency (NSA)
Mark W. Ryan Partner, Mayer Brown
former Director of Litigation, Antitrust Division,
US Department of Justice
New Enforcement Priorities at NHTSA:
How have they changed and what does it
mean for global supply chain management?
December 9, 2015
Erika Z. Jones
Mayer Brown LLP
NHTSA’s New Enforcement Priorities
Administrator Rosekind spoke to AIAG in September of this year:
“I am asking each of you, each of your companies, and this industry to embrace a proactive, forward-looking safety culture, to fully embrace the responsibility that comes from knowing that the highest-risk activity most Americans will undertake each day happens in your products. A proactive safety culture doesn’t avoid talk of problems. It certainly doesn’t conceal them.”
New Enforcement Priorities, Continued
“A proactive safety culture means embracing the idea that customers will demand, should expect, and deserve zero safety defects.”
And, when safety defects nevertheless occur, NHTSA expects:
– Rapid identification and reporting to NHTSA and public
– Prompt development of effective remedies
– 100% recall completion
– Flawless compliance with NHTSA’s recall recordkeeping and reporting regulations
Where We’ve Been ….
• In the 15 year span between 1998 and 2013, NHTSA collected about $92M in penalties in total
• Settlements were resolved without admissions of violation
• Settlements did not ordinarily include remediation or monitors
Where We Are Now ….
• In 2014, NHTSA reached settlements totalling $126M in civil penalties
– GM, Hyundai, Ferrari, Honda
• In 2015 to date, NHTSA has announced settlements totaling $363.65M in civil penalties
– Ricon, Graco, Spartan, Forest River, FCA, Triumph, Takata
• And, 2015 is not over yet!
Standard Settlement Terms Have Changed
• Cases are now resolved with Consent Orders
– Enforceable in District Court
• Admissions of violation are ordinarily required
• Extensive remediation programs required
• Most recently, independent monitors are required: FCA, Forest River, Takata
NHTSA’s Enforcement Reach is Not Limited
to Large OEMs: 2015 Penalty Announcements To Date
Company Penalties Issue
Honda [settled in 2014; announced in 2015]
$70M TREAD issues
Ricon $1.75 M Late recall; sale of unremedied vehicles
Graco $10M Late recall
Spartan $9M Late recalls; TREAD issues
Forest River $35M Late recalls; TREAD issues
FCA $105M and three buybacks Recall Execution Issues
Triumph $2.9M TREAD violations; Recall reporting isues
Takata $200M Late recalls; other issues
NHTSA Reauthorization Legislation
• Last week, President Obama signed a five year reauthorization of NHTSA as part of the Highway Bill (The FAST Act)
• Increases civil penalties to $21K/violation and a cap of $105M for related violations: three fold increase in each case
• Mandates designation of a senior official for safety to sign responses to NHTSA investigations and affirm their accuracy and completeness under penalty of perjury
• Authorizes rewards to whistleblowers who generate information leading to civil penalties of more than $1M
NHTSA’s Broad Reach
• NHTSA sued a motorcycle company, Wildfire, for failing to execute a recall after admitting a noncompliance
• Company may have been undercapitalized
• NHTSA amended the complaint to add the CEO and his wife in their personal capacity
• CEO eventually liquidated his IRA to pay for the recall from personal resources
Beyond NHTSA ….
• Yates Memorandum from DOJ
• BP employee convicted of criminal offenses for regulatory violations
• Peanut Executive convicted and sentenced to jail for safety regulatory violations
• West Virginia mine executive convicted for safety regulatory violations
What Does This Mean for
Global Supply Chain Management?
• Suppliers are not immune from NHTSA’s enforcement reach
– Takata as an example
• By law, OEMs remain in charge of defect determinations in vehicles
– Takata case suggests that NHTSA may not agree
• OEM-Supplier communications are more important than ever
• Integrity in such communications is critical
Thank You!
Mark W. Ryan Partner, Mayer Brown
former Director of Litigation, Antitrust Division, US Department of Justice
Erika Z. Jones Partner, Mayer Brown
former Chief Council, National Highway Traffic Safety Administration (NHTSA)
Rajesh De Partner, Mayer Brown
former General Counsel, US National Security Agency (NSA)