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

AIAG Board Companies (22)

Global Alliances

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

Rajesh De Partner, Mayer Brown

former General Counsel,

US National Security Agency (NSA)

Q & A

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)

Thank you for attending

Stay tuned….

Governance & Ethics Professional Series

“Human Rights and Trafficked Labor” March 2016