GM shares tumble as Kerkorian associate quits board

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The Independent Online

Jerome York, the representative of General Motors' largest shareholder, has quit the board of the giant car maker and launched a vitriolic attack on the leadership of Rick Wagoner, the company's chief executive.

Independent directors are not getting enough information about the state of the company, he said, and the current strategy has doomed GM to continue losing market share to Asian rivals such as Toyota.

His angry departure came 48 hours after GM rejected his favoured option of an alliance with rival car makers Nissan and Renault, and GM shares tumbled 6 per cent as his resignation letter was circulated round Wall Street.

Mr York joined the GM board just eight months ago, after his long-time business associate Kirk Kerkorian built a 10 per cent stake in the company. The pair have argued vociferously that a restructuring of the loss-making North American business should be speeded up.

GM called off talks with Nissan and Renault on Wednesday after Mr Wagoner told the board that an alliance would not provide enough cost savings to justify a deal on terms that would prove acceptable to the other side. Mr Kerkorian and Mr York had been furious that the GM board did not insist on an independent calculation of the possible savings.

In his letter to the company, Mr York lashed out at GM's management for failing to allow board members enough time to study and question company plans and financial information, and added there was "little point" remaining on the board. "I have not found an environment in the boardroom that is very receptive to probing much beyond the materials provided by management."

After saying that the immediate threat of bankruptcy has receded because of the redundancies agreed with GM unions and because of the sale of a 51 per cent stake in the company's finance arm, Mr York went on: "Are they enough? I don't think so. I have grave reservations concerning the ability of the company's current business model to successfully compete in the marketplace with those of Asian producers."

Recent better-than-expected sales have taken the pressure off Mr Wagoner, who earlier this year was fighting for his job. However, Mr York suggested the sales figures are due to special deals for customers and the launch of new models, and the boost would only be temporary.

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