Toyota’s $1.2bn deal to end US probe okayed

Eric Holder, US attorney general (right) speaks during a news conference with Preet Bharara, US  attorney for the Southern District of New York (centre) and Anthony Foxx, US secretary of transportation, at the Department of Justice in Washington. Toyota’s agreement to pay $1.2bn to end a US probe of its attempt to hide safety defects was approved by a federal judge yesterday.

Bloomberg/Manhattan

Toyota Motor Corp’s agreement to pay $1.2bn to end a US probe of its attempt to hide safety defects was approved by a federal judge, who said the case shows how “corporate fraud can kill.”

The accord is the largest criminal penalty imposed on an automaker in the US, Attorney General Eric Holder said on Thursday. As part of the settlement, Toyota, which recalled more than 10mn vehicles in connection with uncontrolled acceleration, admitted wrongdoing and agreed to pay the penalty as well as submit to “rigorous” review by an independent monitor.

“This unfortunately is a case that demonstrates that corporate fraud can kill,” US district judge William Pauley said yesterday in court in Manhattan in accepting the deal. “I sincerely hope that this is not the end but rather a beginning to seek to hold those individuals responsible for making those decisions accountable.”

Toyota was charged with wire fraud, which the government agreed not to prosecute for three years as long as the company, which pleaded not guilty, continues cooperating with authorities. The recalls blemished Toyota’s reputation and caused it to relinquish its title as the world’s top-selling automaker for one year to General Motors, which is now facing probes into how it handled defective ignition switches blamed for at least 12 deaths.

Toyota recalled more than 10mn vehicles worldwide in 2009 and 2010 following complaints of sudden, unintended acceleration. The Toyota City, Japan-based company made modifications to gas pedals and floor mats that were prone to shifting around and jamming the accelerator. Toyota also installed brake override software on recalled models and began making the systems standard on new vehicles.

Christopher P Reynolds, chief legal officer for Toyota Motor North America, appeared in court yesterday on behalf of the company, telling the judge that he understood the terms of the accord and financial penalty. In a statement on Thursday, Reynolds said the company “took full responsibility” for its actions.

Toyota will not seek tax deductions or credits for the penalty, according to the deferred prosecution agreement. A statement of facts about the defects that Toyota acknowledged was true as part of the deal “paint a reprehensible picture of corporate misconduct,” Pauley said.

Toyota admitted in the statement that it misled US consumers from late 2009 through March 2010 “by concealing and making deceptive statements” about safety issues related to sudden acceleration. The company also gave inaccurate information to members of Congress, and concealed from regulators the extent of problems some customers experienced with sticking gas pedals and unsecured floor mats, Holder said.

The automaker “undertook acts of concealment” amid scrutiny that followed an August 28, 2009, accident in San Diego. The driver, a California Highway Patrol officer and three family members were killed in the incident after the accelerator of a Lexus ES350 became stuck in the floor mat, causing the vehicle to run an uncontrollably at more than 100 miles an hour, the government said.