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Comment by SV_BubbleTime | Hacker News Reader

> Weren't there VCs who put money into this?

Definitely, but worse than that, real companies that really should have known better.

GM associated themselves. For what reason I can’t figure out. It must have been high up because the GM engineers I know all knew it was a 100% scam.

It’s like anything else that confuses me in business. Some idiot made a mistake, sure, but then their boss approved that, and all the other people required approved it, and at no point did anyone say “Hey, wait, no, stop”.

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I read an article, over a year ago now, that said the GM deal was nothing but upside for GM

They got cash from Nikola whether they ended up manufacturing anything for them or not, and had to put up nothing up front.

Reputational hit from propping up literal fraud. Opportunity cost from not partnering with better companies in the space.

GM’s reputation is trash with anyone but patriotic “GM/Chevy” Americans already.

So long as the public are willing to believe they’re essential, they’ll remain too big to fail and don’t need to worry about their reputation.

One of the NKLA board members Steve Girsky was previously a Vice Chairmen at GM and likely facilitated this deal. I think it needs to be investigated further and Mary Barra should be forced to provide the evidence of due dilligence that GM collected during the closing of the deal.

What due diligence is reasonably required of GM, if the deal is obviously a win or wash for them, no matter what happens at NKLA?

Some analysis that they knew how scammy it was and proceeded because of an analysis it was worth it in other ways?

If all there is, is a memo saying ‘just buy it, and don’t look too hard’, or it looks like they fell for an obvious scam, then the execs can be on the hook for negligence to the shareholders

I think its more sinister then that unfortunatly. The GM deal was concocted to give almost zero risk to GM but crucially it was intended to give new investors confidence that a major player looked at NKLA and did due diligence.

Sounds like tons of billable hours to me while every email and correspondence is pored over to see if it is a giant conspiracy and who knew what, and when, etc.

I can feel the lawyers yachts being built.

I get the sense that you (& many others) believe that GM should have acted as a regulated bank ("know your customer" rules), as a regulated securities rating firm, and/or as an authoritative moral inquisitor & judge with regard to NKLA.

GM is none of those. (And they were not proposing to acquire NKLA, for "due diligence" to apply for that reason.) They are a car company. Their execs' duty to GM shareholders is to not stupidly squander GM's money. The contract was a "win or wash" situation for GM - so that duty was fulfilled. They don't have to even do - let alone produce - a written analysis. The same goes for GM's contracts with the supplies of tires, floor mats, wiper blades, etc. for the cars they assemble.

Certainly one can accuse GM of acting rather uncaring and sleazy with regard to NKLA. Nothing special about that - most older people (at least from parts of the U.S. where the auto industry is concentrated) could tell you that all of the big auto makers got over their "Don't Be Evil" idealism many, many decades ago now.

They have a duty to they shareholders to not squander money, correct? That is what I was addressing.

Also, individually they have duties to not commit crimes (like conspiracy to defraud, or whatever).

If there is evidence they conspired with someone to commit securities fraud, even if it had nothing to do with GM, then regardless of their duties to GM, then they can go to jail for that.

If they knowingly were irresponsible/negligent as officers of the company in how they approved deals, they could be fired or sued, depending on how blatant it is.

Since it didn’t seem to hurt GM’s bottom line, seems like the latter is unlikely.

Because it would be illegal for Girsky to use his influence to have GM say they did due dilligence thus attracting other investors to the slaughterhouse.

Welcome to broken Capitalism, when the incentives are ass-backwards. Juice quarterly returns, give yourself a massive tax-lite bonus, and walk away from ruins. Or better yet, get in on a con or a pyramid scheme. What's the worst that can happen? Jail? Please.

It's just, this time the pyramid collapsed faster than it should have. Due diligence is for losers.

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