GM Scrambles To Clarify Financial-Disclosure 'Tude
June 04, 2009
By Bill Visnic
Barely 48 hours into its new era as a bankrupt company, General Motors executives hustled to backtrack on a provocative statement from its chief financial officer that also was tinged with an arrogance that could damage the company's need to appear contrite before customers and politicians.
GM CFO Ray Young told the media that thanks to its now-bankrupt status, GM technically is a private company -- and as such is not obligated to make available the same depth of corporate financial information as are public corporations.
In a conference call with media and analysts Tuesday, Young said GM was deciding how much of its financial information would be made public, but it likely wouldn't be as all-encompassing as public companies are required to report.
Kent Kresa, GM interim chairman, also insinuated earlier this week that GM wouldn't be providing as much financial disclosure as it did as a public company.
GM CEO Fritz Henderson hastened to make amends, telling Congress Wednesday "it's our obligation to be open and transparent in all we do to reinvent GM."
Some extra guidance to GM on what might be considered "doing the right thing" seemed to come from the press secretary for Ontario, Canada's premier, Dalton McGinty, and Kevin Gaudet, the federal director of the Canadian Taxpayers Federation. The Canadian government also is providing funding to GM, which has several facilities in Canada.
The Canadian government owns and operates several major businesses, and Gaudet told the The New York Times. "It is a peculiar definition to call a taxpayer-owned company, 'private.' Taxpayers, now that they are shareholders, have a right to know how these executives are spending our hard-earned tax dollars."
And the Ontario premier's press secretary said, "The Ontario government's preference would be for public disclosure."
GM issued a statement that read: "Following the closing of the '363' (section of U.S. Bankruptcy Code) sale, New GM intends to make regular disclosures during the period it is private in order to provide appropriate information regarding our financial condition.
"New GM," the statement continued, "is making plans to become a public company after the sale as soon as it can meet all the reporting requirements. At that time, GM intends to comply fully with the public disclosure requirements of the U.S. securities laws, including but not limited to 10-K, 10-Q and 8-K filings."
But perhaps the most definitive "last word" on the dust-up came from Senator Lamar Alexander (R-TN), who is drafting a bill requiring GM to issue shares of the new company to all American taxpayers once it emerges from bankruptcy.
"Members of Congress, members of the Obama administration are going to be all over them, asking questions," Alexander said of the financial transparency likely to be expected of GM.
"They're going to end up being a very public private company."
Posted by Michelle Krebs at 3:41 AM under Featured , GM , News , Personalities | Comments (3) | digg this | Seed Newsvine
As a brand new shareholder by virtue of my status as a taxpayer, I demand full disclosure. I'm also ready to call for Ray Young to be defenestrated.
Posted by: stephen987 | June 04, 2009 at 6:10 AM
The New GM might do well to devote some resources to coaching its team to abandon the pervasive corporate arrogance that is an element of GM's culture that must be left with the old GM.
Posted by: cabrio8 | June 04, 2009 at 6:35 AM
That Young guy is an arrogant prick and when I saw him on the Fox mid-morning news last week answering this very question I figured that MAYBE GM had specifically hired him to be a bulldog for some reason. His demeanor and arrogance seemed extremely visceral and odd to me.
Posted by: playdrv4me | June 08, 2009 at 12:48 PM