Toyota pays record $1.2bn penalty for covering up defects


Toyota Motor Corp. will pay $1.2 billion to settle US criminal charges that it lied to safety regulators and the public as it tried to cover up deadly accelerator defects.

The Japanese auto giant eventually recalled 12 million vehicles worldwide in 2009 and 2010 at a cost of $2.4 billion as the scandal over sudden, unintended acceleration spread and tarnished its once-stellar reputation.

“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,” Attorney General Eric Holder told reporters.

“When car owners get behind the wheel, they have a right to expect that their vehicle is safe.”


In reaching the settlement, Toyota admitted that it lied when it told both the public and US safety regulators in 2009 that it had addressed the root cause of the problem by fixing floor mats that could trap the accelerator.

In fact, Toyota had just weeks earlier taken steps to hide another defect from safety regulators which had first surfaced in Europe the year before.

As part of the cover-up, Toyota scrapped plans to fix the “sticky pedal” defect in the United States and instructed employees and its parts supplier not to put anything about the design changes in writing.

Toyota eventually revealed the sticky pedal problems and recalled millions of affected vehicles.

But it continued to try to cover its tracks by lying to the public, safety regulators and even a US congressional hearing about when the problem was discovered, the settlement agreement said.

Toyota said it has made “fundamental changes” to improve its handling of safety issues and consumer complaints and is “committed to continued improvement in everything we do to keep building trust in our company, our people and our products.”

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“Entering this agreement, while difficult, is a major step toward putting this unfortunate chapter behind us,” Christopher Reynolds, chief legal officer for Toyota Motor North America, said in a statement.

“We remain extremely grateful to our customers who have continued to stand by Toyota. Moving forward, they can be confident that we continue to take our responsibilities to them seriously.”

Holder warned other car companies to “not repeat Toyota’s mistake.”

“A recall may damage a company’s reputation, but deceiving your customers makes that damage far more lasting,” he said at a press conference.

The Toyota settlement came as General Motors is under fire for taking more than 10 years to address an ignition problem linked to more than 30 crashes and 12 deaths.

Holder declined to confirm or deny reports that the Justice Department is investigating GM’s conduct.

However, he said the Toyota settlement is “reflective of the aggressive nature we would take” should an automaker try to deceive the public, “and the way we would resolve it.”

The settlement does not free Toyota from potential prosecution.

The Justice Department agreed to defer prosecution on criminal charges, and will withdraw the charges in three years, if Toyota abides by the settlement, including cooperating with an independent monitor assigned to review and oversee the its policies with respect to auto safety and its public communications.

The $1.2 billion fine is the largest financial penalty that the US Justice Department has imposed on an automaker.