The U.S. Justice Department announced Wednesday that Toyota Motors has agreed to pay penalties amounting to $1.2 billion as settlement for a four-year criminal probe that stemmed from safety issues of its vehicles. The announcement comes after the government filed a case for wire fraud at a federal court in Manhattan against the company.
As part of the agreement, the car manufacturer admitted that it deceived the public and regulators while handling customer complaints about unintentional acceleration of its vehicles due to two reported safety issues.
"Rather than promptly disclosing and correcting safety issues about which they were aware, Toyota made misleading public statements to consumers and gave inaccurate facts to Members of Congress," said U.S. Attorney General Eric Holder.
"When car owners get behind the wheel, they have a right to expect that their vehicle is safe. If any part of the automobile turns out to have safety issues, the car company has a duty to be upfront about them, to fix them quickly, and to immediately tell the truth about the problem and its scope. Toyota violated that basic compact. Other car companies should not repeat Toyota's mistake: a recall may damage a company's reputation, but deceiving your customers makes that damage far more lasting," Holder added.
In 2009, Toyota issued a limited recall for eight of its vehicles in order to address what is supposed to be the root problem of inadvertent acceleration due to a mismatched floor mat that can trap the gas pedal. However, the National Highway Traffic Safety Administration was deceived by the carmaker since the latter did not disclose that there were other vehicles that had similar design features making them prone to the same problem.
The case filed against Toyota mentioned of a well-publicized incident that happened August 2009 when a family of four died in a car crash due to a stuck accelerator. The said family was driving a Lexus ES350 when an occupant in the vehicle called 911 to seek assistance as their vehicle was going over 100mph.
"We're in a Lexus . . . and we're going north on 125 and our accelerator is stuck . . . there's no brakes . . . we're approaching the intersection . . . Hold on . . . hold on and pray . . . pray," the Justice Department shared the transcription of the call included in the case. The said call ended with the operator hearing a big crash at the other end of the line.
Prior to the San Diego accident that prompted the recall of eight vehicle models; an investigation was also conducted by the NHTSA in 2007 to look into reports of unintended acceleration. However, Toyota opted to conceal the findings from the NHTSA and instead recalled thousands of defective mats. The move of the company purportedly saved it more than $100 million.
Aside from the floor mat entrapment, the vehicle manufacturer also deceived the public and regulators about the sticky pedal problem. Instead of reporting the issue and recalling vehicles, Toyota tapped another party to change the pedals of the affected vehicles. A concerned subsidiary presented cases to the manufacturer that hinted of manifestation of the sticky pedal issue that caused unwanted accelerations or "overruns."
The carmaker had planned design changes to address the issue but later on cancelled its implementation and even instructed subsidiaries not to document the cancellation in writing. The sticky pedal issues affected several models of the Corolla, Camry, and Matrix. The company carefully planned its negotiations and disclosures with the NHTSA. The company also issued misleading statements declaring that the problems were addressed when in fact they were not. Toyota also deceived regulators and lawmakers about the timeline when they learned of the safety issues.
"Toyota stands charged with a criminal offense because it cared more about savings than safety and more about its own brand and bottom line than the truth," said U.S. Attorney for Southern District of New York Preet Bharara.
While the money might be spare change for the biggest car manufacturer in the globe, the whole story of deception and of putting money above safety of its consumers will most likely hurt the brand in the long run. Maybe karma also has a sticky pedal.
