Toyota “knowingly hid a dangerous defect” in Violation of U.S. Law, LaHood Says

[scandal 951]

http://www.businessweek.com/news/2010-04-05/toyota-hid-pedal-defect-in-violation-of-u-s-law-lahood-says.html

Toyota Hid Pedal Defect in Violation of U.S. Law, LaHood Says

April 05, 2010, 8:04 PM EDT

By Angela Greiling Keane and Alan Ohnsman

April 6 (Bloomberg) -- Toyota Motor Corp. “knowingly hid a dangerous defect” that caused its vehicles to accelerate unexpectedly, the U.S. said, for the first time accusing the world’s largest automaker of breaking the law.

Transportation Secretary Ray LaHood proposed a record civil penalty of $16.4 million, the most the government can impose. The fine recommended yesterday escalates the confrontation between Toyota and LaHood, who initially praised the carmaker for its handling of recalls the company attributed to faulty accelerator pedals.

The fine was announced the week after Toyota reported U.S. sales rose 41 percent in March with the help of no-interest loans and discount leases, signaling the company may be recovering from recalls of more than 8 million vehicles worldwide.

The Transportation Department’s action showed “safety matters and they’re going to be tough as nails,” Joan Claybrook, a former head of the National Highway Traffic Safety Administration, said in an interview. “That’s very appropriate. They caught Toyota red-handed.”

The Japanese automaker waited at least four months before telling the agency that accelerator pedals might stick, LaHood said in a statement yesterday. Companies have five business days to report safety defects, the agency said.

“We now have proof that Toyota failed to live up to its legal obligations,” LaHood said in the statement. “Worse yet, they knowingly hid a dangerous defect for months from U.S. officials and did not take action to protect millions of drivers and their families.”

Multiple Fines Possible

The penalty could “very possibly” be the first of multiple fines, said Claybrook, who is former president of Public Citizen, a Washington-based consumer advocacy group.

Toyota hadn’t received NHTSA’s letter on the fine, according to an e-mailed statement yesterday from the company’s North American sales unit.

“We have already taken a number of important steps to improve our communications with regulators and customers on safety-related matters as part of our strengthened overall commitment to quality assurance,” the company said, without saying whether it will exercise its right to dispute the fine.

LaHood has increasingly faulted Toyota’s response since Jan. 28, when he said he had “no criticism” of the company and Toyota “did what they’re supposed to do.”

Toyota, based in Toyota City, Japan, in January recalled about 2.3 million U.S. cars and trucks for sticky accelerator pedals.

NHTSA cited documents obtained from Toyota in saying the company knew about the pedal defect since at least Sept. 29, the day it told distributors in 31 European countries and Canada to make repairs to resolve sticky-pedal complaints.

‘They Screwed Up’

“NHTSA wants to make it clear that it was Toyota that was at fault and the agency did its best within the system,” said Alan Baum, an auto industry analyst at Baum & Associates in West Bloomfield, Michigan. He said Toyota probably won’t contest the fine, “since they’ve essentially said they screwed up.”

At a February congressional hearing, Toyota’s U.S. sales chief Jim Lentz told lawmakers “we failed to promptly analyze and respond to information emerging from Europe and in the United States” about the sticky pedals.

Toyota has two weeks to accept or contest the proposed fine, Olivia Alair, a Transportation Department spokeswoman, said in an e-mail. If Toyota contests the penalty and a settlement isn’t reached, “it would go to court,” she said.

‘Firepower to Attorneys’

“One of the biggest reasons to fight the fine would be to defend themselves from the language used by the Department of Transportation,” Ed Kim, an industry analyst for forecaster AutoPacific Inc. in Tustin, California, said in an interview. “That would seem to provide some firepower to attorneys that are suing the company.”

NHTSA’s largest civil penalty was $1 million against General Motors Corp. in 2004 to settle charges that the company failed to conduct a timely recall involving windshield-wiper failures in about 581,000 vehicles.

“Both industry and government failed the test of putting the safety of America’s drivers first” in the Toyota recalls, Representative Darrell Issa, the top Republican on the House Oversight and Government Reform Committee, one of three panels that has held hearings on Toyota actions, said in a statement yesterday.

The proposed NHTSA fine may help consumers suing Toyota over sudden acceleration, said Houston attorney W. Mark Lanier, who has filed class-action and individual lawsuits related to the claims.

‘Free Publicity’

“Toyota is spending millions of dollars on public relations right now to sway consumers or a potential jury pool,” Lanier said in a phone interview. The fine “is free publicity that counters Toyota.” The penalty probably couldn’t be introduced in court because “it’s not like a criminal finding in that there was due process,” he said.

Toyota is facing at least 177 consumer and shareholder lawsuits seeking class-action status and at least 56 suits claiming personal injuries or deaths caused by sudden acceleration incidents, according to data compiled by Bloomberg. Lanier has filed two personal injury cases and is considering filing about 100 others, including a dozen involving deaths, he said.

Toyota’s American depositary receipts, each equal to two ordinary shares, rose 77 cents to $81.26 at 4:15 p.m. yesterday in New York Stock Exchange composite trading. They have lost 3.4 percent this year before today compared with the benchmark NYSE Composite Index, which has increased 5.8 percent.

[Obama 2012 1,714]

Ridiculous.

[Kathryn41 3,205]

Post containing racially inappropriate material has been removed. Humour isn't always humourous if you are the brunt of the joke.

Edited April 6, 2010 by Kathryn41

[scandal 951]

Mods modding ex-mods. Good grief.

Where does it end?

[spookyturtle 9,466]

Good. I hope Toyota is held accountable for their devious ways.

[scandal 951]

Good. I hope Toyota is held accountable for their devious ways.

I hope the censors are too.

[spookyturtle 9,466]

I hope the censors are too.

What did I miss? Send me a pm if you can't post it here.

[scandal 951]

I'll post it here. What's she going to do? Suspend me? BFD.

Jenn posted a link to a webpage that had something silly about Japanese people. It wasn't particularly rude or nasty, just mildly funny, and kind of appropriate given the Toyota/Japan connection. Only the URL link was posted, no actual content. It wasn't even a clickable hyperlink - you had to copy/paste the text in your browser window to see it.

Jenn is a former VJ mod, and presumably has a good sense of balance and proportion as to what's compliant with the site TOS. But the jackboots came marching down.......

Now I'll get the speech about how I'm supposed to take up my gripes with the moderation policy in PMs or with Ewok. Screw that. Makes me sick.

[spookyturtle 9,466]

Toyota still sucks.

[luckytxn 2,264]

Have to love the fact that Toyota is being fined by your own competition.

[Jenn! 918]

I'll post it here. What's she going to do? Suspend me? BFD.

Jenn posted a link to a webpage that had something silly about Japanese people. It wasn't particularly rude or nasty, just mildly funny, and kind of appropriate given the Toyota/Japan connection. Only the URL link was posted, no actual content. It wasn't even a clickable hyperlink - you had to copy/paste the text in your browser window to see it.

Jenn is a former VJ mod, and presumably has a good sense of balance and proportion as to what's compliant with the site TOS. But the jackboots came marching down.......

Now I'll get the speech about how I'm supposed to take up my gripes with the moderation policy in PMs or with Ewok. Screw that. Makes me sick.

wow

Mods respond to reports, so probably someone with an axe to grind with me.

Anyway, I love the Japanese. I am one, so I kind of was the brunt of the joke, which is partially why I thought it was mildly funny. Oh well.

ETA: And lest anyone still be confused by my tongue-in-cheek humor, I don't believe Japanese people are untrustworthy, with the notable exception of Toyota executives, that is.

Edited April 6, 2010 by Jenn!

[luckytxn 2,264]

If she thinks it was needed to remove then it probably was. She has been pretty much hands off on us OT'ers.

[Jenn! 918]

If she thinks it was needed to remove then it probably was. She has been pretty much hands off on us OT'ers.

Right-o. I'll try to tone down my blatantly racist rants. They're obviously unwelcome here.

Edited April 6, 2010 by Jenn!

[Obama 2012 1,714]

Have to love the fact that Toyota is being fined by your own competition.

Yeah, how does conflict of interest play in there?

Makes it hard to sue someone who's controlling an industry.

This is also why it's very bad for the government to dip its nose even more into health care.

[w¡n9Nµ7 §£@¥€r 123]

Right-o. I'll try to tone down my blatantly racist rants. They're obviously unwelcome here.

I hit reply, spent a whole minute trying to recollect a choice insult to the japanese from one of the many bruce lee movies i've seen.. and couldn't. I must be getting old.