Criminal Investigation Launched into Toyota Safety Problems

Toyota Motor Corp. is now the target of a federal criminal investigation and a Securities and Exchange Commission (SEC) probe into how it responded to safety problems with Toyota and Lexus vehicles, which have resulted in the recall of millions of cars.

The subpoenas were sent by a federal grand jury in the Southern District of New York on February 8 and the SEC on February 19, the company announced on Monday. Both appear to be looking at how the company reacted to complaints about Toyota safety problems and whether the automaker attempted to cover up or downplay the seriousness and number of problems being reported.

Toyota has recalled nearly 9 million vehicles since September 2009, with 8.5 million recalled due to complaints that they can accelerate out of control. The acceleration recalls were done in waves, starting with 4.2 million recalled for problems involving the floormats, and then later recalls indicated that there was a mechanical or electrical problem with the gas pedals. More than 400,000 Prius and Lexus HS250h 2010 model year vehicles were also recalled this month due to problems with the brakes. In addition, Toyota is considering a recall of some Corolla models due to complaints about steering.

The investigations come as Toyota executives prepare to face Congress this week in a highly-anticipated hearing that will feature Toyota’s president, Akio Toyoda, who is also the grandson of the company’s founder. In an op-ed piece published in the Wall Street Journal, Toyoda gave a possible preview of his testimony, apologizing and dedicating that he would improve his company’s response to complaints.

“[I]t is clear to me that in recent years we didn’t listen as carefully as we should – or respond as quickly as we must – to our customers’ concerns,” Toyoda wrote. “While we investigated malfunctions in good faith, we focused too narrowly on technical issues without taking full account of how our customers use our vehicles.”

U.S. lawmakers have given indications that Toyoda and James E. Lentz, the president of Toyota Motor Sales U.S.A., are in for a rough ride when they face questioning over their company’s handling of the recalls and customer complaints. In a letter to Lentz from the House Committee on Energy and Commerce, Chairman Henry Waxman expressed skepticism that the company moved to respond to complaints in good faith.

“In the documents provided to the Committee, Toyota representatives commonly responded to drivers reporting sudden unintended acceleration by concluding that the events the consumer described could not have happened,” Waxman wrote. “Toyota’s internal files are replete with such statements from the company.”

The Toyota accelerator pedal recalls have resulted in more than 60 Toyota lawsuits, including over a dozen wrongful death and personal injury claims.

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