Toyota's $1.2B Settlement Puts Criminal Probe To Rest

Toyota will pay $1.2 billion to end a federal criminal probe into a vehicle recall. Federal regulators said five people died in accidents related to unintended acceleration prior to the recall.

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From NPR News, this is ALL THINGS CONSIDERED. I'm Robert Siegel.

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And I'm Audie Cornish. To begin this hour, a massive settlement between the U.S. government and an automaker. Toyota is paying $1.2 billion to resolve a criminal charge. The Justice Department had accused Toyota of defrauding and misleading its customers about the safety of their vehicles. It's all because of Toyota's handling of cases of unintended acceleration, which came to light five years ago. This is the largest penalty of against a car company, as NPR's Sonari Glinton reports.

SONARI GLINTON, BYLINE: Not all publicity is good publicity, especially for a carmaker that prides itself on the safety and reliability of its vehicles. Here's U.S. attorney for the southern district of New York, Preet Bharara delivering the news about Toyota at a press conference in Washington.

PREET BHARARA: Today, one of the largest carmakers in the world stands charged with a criminal offense. Toyota Motor Corporation is in that position because it cared more about savings than safety, because it cared more about its own brand and bottom line than the truth.

GLINTON: That criminal charge and settlement is the culmination of a four year investigation which Bharara's office led. It was around the issue of unintended acceleration by certain Toyota cars and SUVs. The problem gained wide attention in 2009 when a highway patrolman and his family were killed in a Lexus.

In the agreement Toyota signed, the company admitted to misleading the public with various statements around the time of the recall. Again, Bharara.

BHARARA: And if there's ever a time when you want companies to be telling the truth and assuring people with facts rather than with fantasy, it's when people are concerned about their lives. When you're talking about products like cars that are inherently dangerous, that means a lot. And the message to everyone is that at the moment where people are most concerned, that is when this company, as a statement of facts points out and as they now admit, chose to lie.

GLINTON: In a statement, Toyota says it addressed problems with sticky pedal and floor mat entrapment issues and said, quote, "entering this agreement, while difficult, is a major step towards putting this unfortunate chapter behind us."

CARL TOBIAS: And probably the worst aspect is all the civil cases involving liability for physical injuries and death.

GLINTON: Carl Tobias is a law professor at the University of Richmond. He says today's settlement will give plaintiff's lawyers leverage when negotiating settlements.

TOBIAS: Admissions in the settlement agreement involving the criminal liability could play back on the settlement negotiations for civil liability because there are a number of damning admissions that Toyota makes.

GLINTON: The $1.2 billion settlement is just a drop in a bucket when you consider Toyota has the equivalent of about $35 billion in cash on hand. But is there a lasting impact to the company? Karl Brauer is the senior analyst with Kelley Blue Book. He say Toyota is still the largest carmaker and enjoys a hard won reputation.

KARL BRAUER: The truth is that in that timeframe the amount of trouble that they've had and the amount of time it took for them to have the trouble with this unintended acceleration was a small, tiny fraction of it. And that's not going to be enough, overall, to damage what they've done for the last 40-plus years.

GLINTON: Brauer says one of the things the industry can learn from today is to be more responsive to customer complaints.

BRAUER: General Motors is going to learn the same lesson. I think they have. They seem to want to put in place systems that will get information back to the executives as quickly as possible as soon as mechanical failures and consumer dissatisfaction starts to crop up.

GLINTON: And, he says, if GM is as honest as possible with its problems, it may not end up in the same place that Toyota is today. Sonari Glinton, NPR News.

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