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Toyota Faces U.S. Criminal Probe Over Recalls

February 22, 2010 at 12:00 AM EST
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A federal grand jury has opened an investigation over whether Toyota tried to cover up the acceleration problems that sparked its massive vehicle recall. The beleaguered automaker also faces congressional hearings later this week. Gwen Ifill talks to a Detroit News reporter for more.
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JEFFREY BROWN: Next: Internal documents shed new light on Toyota’s safety troubles.

Gwen Ifill has that story.

GWEN IFILL: The Japanese automaker said today it is under criminal investigation over safety problems that have resulted in the recall of 8.5 million vehicles. The internal company documents turned over to congressional investigators also say Toyota saved over $100 million by negotiating repairs and recalls with the government.

The documents, part of an internal presentation made for officials at Toyota’s Washington office in July 2009, boasts of wins for Toyota and the industry from favorable recall outcomes.

Toyota’s response, issued Sunday: “Our first priority is the safety of our customers. And to conclude otherwise on the basis of one internal presentation is wrong.”

David Shepardson has been covering the story for The Detroit News. And he joins us once again to talk about it.

These documents, David, that we have read about, are they marketing documents? Are they strategy documents?

DAVID SHEPARDSON, The Detroit News: This was a presentation for Toyota’s North American chief on his second day in the job in July 2009.

And it basically was trying to show what the office in Washington had done. And in listing all the accomplishments, they pointed to a series of examples where the government didn’t force the company to do as much as some would have liked, specifically on sudden-acceleration complaints, where they only recalled about 55,000 floor mats, rather than a more comprehensive mechanical fix.

GWEN IFILL: Were they just boasting of saving money just in general to impress the new boss?

DAVID SHEPARDSON: I think that was a lot of it. But I think the question being raised is, was this a change in the culture at Toyota, where this company has been known for safety? And when people think of the word Toyota, they think reliability or safety.

But this document, in sort of black and white, is painting an example, of time after time, we — it delayed recalls. We delayed safety regulations. And we made — and puts precise dollar figures on each of those — those — quote, unquote — “wins.”

GWEN IFILL: In a week when we’re going to hear — have hearing on Toyota’s safety problems, tomorrow and then Wednesday, how did these documents come to light? And were they recall — related in any way to this new — news we hear today about an investigation?

DAVID SHEPARDSON: Well, they are one of the documents that the grand jury in New York and the SEC in Los Angeles is going to be looking at as they probe whether Toyota was truthful and followed federal recall laws.

But it’s more to this — they were required to turn over about 75,000 documents looking all these recall issues over runaway vehicles over 10 years. And what this document, I think, shows is that a month before a horrific crash in California, which really prompted the company to finally move, they were bragging about having done much less than a lot of people would have liked them to do.

GWEN IFILL: One of the things they were bragging about is that they got the federal government essentially to back off some of the recalls they would have otherwise had to make.

DAVID SHEPARDSON: Right.

GWEN IFILL: And that’s why they would have spent all of this extra money.

What is the role of the — is it the National Highway Transportation Safety Administration, NHTSA, in all of this?

DAVID SHEPARDSON: Right.

Well, it is handling about 30,000 complaints a year, with only 50 or 60 investigators. And what they do with the auto companies is, they negotiate often. I mean, there are multiple issues. Some gone on years. I mean, this sudden-acceleration issue at Toyota, they have been investigating for about seven or eight years.

And they have looked at this whole issue for 30 years. So, there’s a give-and-take between the government and the auto company about what size the recall will take, how many model years.

And — but what I think you’re going to see is, NHTSA is going to be far less willing to negotiate. And they’re going to basically say, either you agree to a recall, what we want to do, or we can go and compel you to do that eventually through an administrative hearing and ultimately the courts.

But it does raise questions about, was NHTSA tough enough on Toyota? I mean, they did have six separate investigations on this issue, and all they did was recall 55,000 floor mats, until last fall.

GWEN IFILL: And negotiations are — that’s normal for these kinds of negotiations to take place between…

DAVID SHEPARDSON: Right. It is.

GWEN IFILL: … not only Toyota, but any auto?

DAVID SHEPARDSON: Oh, every auto company. I mean, that is the practice that has gone on for decades at NHTSA, where they find a complaint. They look at the vehicle population. NHTSA might say, we want five years’ worth of vehicles recalled. And the auto company might say, well, the last year, there’s not as many complaints. We think we only need to recall four years’ worth.

And it is going to expose to the public, I think, that this process, when they think of safety, is all about negotiations. And if you’re the unlucky one who has a vehicle that doesn’t get recalled because the company was successful in avoiding a recall for that year, I think — you know, I think you’re not going to be too pleased with that.

GWEN IFILL: Well, especially if you’re one of the victims of one of the accidents which we saw happen with some of these vehicles.

So, what — we know that, as I mentioned, there are going to be hearings for the next couple of days on Capitol Hill about all of this.

DAVID SHEPARDSON: Right. Yes.

GWEN IFILL: What — what do we expect?

DAVID SHEPARDSON: You can expect a lot of fireworks.

I mean, number one, you’re going to have victims of some of the crashes testify. You’re going to have a couple from Tennessee tomorrow testify about their runaway vehicle and the fact that they filed a complaint, and nothing got done.

But the main event is Toyota’s global president, Akio Toyoda, the grandson of the founder of the company, coming from Japan to face Congress. And this is going to be a worldwide event. I mean, this — Toyota is one of the most important companies in Japan, if not the most important. You know, it’s the largest automaker worldwide.

And it’s going to come down to, does the public and Congress believe that he and the company are being truthful with the American people, they have done everything they could to prevent this and prevent things from — going forward?

And, you know, the company’s future is really riding on this hearing.

GWEN IFILL: David Shepardson of The Detroit News, which broke the story, thank you so much.

DAVID SHEPARDSON: Thanks, Gwen.

JEFFREY BROWN: For the record, Toyota is an underwriter of the “NewsHour.”