GM Completes Internal Probe of Hughes Unit

General Motors’ Hughes Aircraft subsidiary has completed an internal investigation of alleged financial irregularities surrounding consulting fees involved in certain satellite contracts and is cooperating with a federal investigation, GM executives said Friday at the company’s annual meeting.

“As far as we are concerned, all the investigations we conducted are over, and we’ve got a new chairman (at Hughes),” GM Executive Vice President Donald Atwood, who oversees Hughes Aircraft, said in response to a question from a shareholder.

Albert Wheelon, Hughes’ former chairman, retired suddenly earlier this month after just 13 months as head of the Los Angeles-based defense contracting firm and was replaced by Malcolm R. Currie.

Wheelon and former Hughes Vice President Paul Visher have been named in subpoenas issued by a federal grand jury investigating whether fees paid to some Hughes consultants in South America may have been diverted to Jose L. Alegrett, former Intelsat deputy director. Intelsat, an international agency that provides telephone service via satellite between countries, has purchased satellites built by Hughes.

Keeping Autonomy

Atwood did not disclose the findings of GM’s probe. He added later at a press conference that he is not sure whether the federal investigation, reportedly being handled by the Justice Department, is covering the same ground as the company did in its review. He also said he has “no idea” whether there will be any indictments resulting from the federal investigation.

Atwood also said GM has no plans to reduce Hughes’ independence in the wake of the apparent scandal. He said GM’s decision to install a GM staffer--corporate Assistant General Counsel John Higgins--as Hughes’ new general counsel does not signal a step back from GM’s earlier pledge to give autonomy to Hughes.

Higgins replaced Richard Alden, Hughes’ vice chairman and general counsel, who unexpectedly retired last month. Atwood added that Alden’s retirement had nothing to do with the internal probe at Hughes.

“They (Hughes) requested him (Higgins),” Atwood said.