Power struggle brewing in GM over state aid for Opel

Nov 13, 2009, 10:36 GMT

Berlin - Signs of a power struggle between the two top executives in General Motors (GM) emerged Friday in an interview given to a German paper by the Detroit car giant's chairman Edward Whitacre.

Last week GM made an surprise U-turn on plans to sell its European subsidiary Opel, angering the firm's 25,000 workers in Germany and the Berlin government.

Whitacre told the Kolnische Rundschau, 'I believe that we really don't need any money from the German government. If (German Chancellor) Ms Merkel does not want to make anything available, then we will just pay for it ourselves.'

'Maybe this news will make your chancellor happy,' he added.

However, GM chief executive Fritz Henderson is believed to be seeking German government aid, similar to the credit offered by Berlin to a potential buyer for Opel.

Whitacre also distanced himself from Henderson's apology earlier this week for the way GM suddenly announced that it would not sell Opel as planned to Austrian parts manufacturer Magna and a Russian bank.

'I do not agree at all with Henderson on this. The decision-making process may well have caused some confusion, but there is nothing to reproach us for,' Whitacre, a former AT&T executive and US President Barack Obama's appointee to the board of GM, said.

In the past several days confusion has reigned over whether or not the German government was prepared to finance GM's restructuring of Opel. On Tuesday, Chancellor Merkel said that GM would have to bear 'the main burden' of making the ailing carmaker profitable again.

On Friday, the head of Opel's workers' council, Klaus Franz, said 'we are living through days of chaos with GM. The chairman does not know what the chief executive is doing.'

'There is no agreed communications strategy, no agreed business policy,' Franz told the German Press Agency dpa.

The rift between Henderson and Whitacre is thought to date back to before GM announced it would hold on to Opel, with the former in favour of selling Opel to Magna, and the latter - who has a reputation as a tough negotiator - against it.

GM has since said that it would repay the amount that it had used of the 1.5 billion euros (2.2 billion dollars) provided as a bridging loan by the German government by the end of the month.

Berlin offered Magna a further 3 billion euros in credit and other aid to restructure Opel. No such clear offer has been made now to GM in the wake of its surprise decision, and government advisors on Friday came out strongly against state aid for GM.

The government's top economics advisors, known as the 'five wise men' said that a further burden on taxpayers could not be justified.