Japanese auto giant Toyota has agreed to pay a penalty of USD 1.2 billion to end a four-year criminal investigation into safety issues with its cars, US Attorney General Eric Holder said today.
This is the largest penalty of its kind ever imposed on an automotive company, the Justice Department said as it also announced a criminal wire fraud charge against Toyota which alleges the Japanese automaker defrauded consumers in the fall of 2009 and early 2010 by issuing misleading statements about safety issues in Toyota and Lexus vehicles.
"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," Holder said.
"When car owners get behind the wheel, they have a right to expect that their vehicle is safe. If any part of the automobile turns out to have safety issues, the car company has a duty to be upfront about them, to fix them quickly, and to immediately tell the truth about the problem and its scope. Toyota violated that basic compact," he said.
"Other car companies should not repeat Toyota's mistake: a recall may damage a company's reputation, but deceiving your customers makes that damage far more lasting," he warned.
Toyota concealed from federal regulators the extent of problems that some consumers encountered with sticking gas pedals and unsecured or incompatible floor mats that could cause these unintended acceleration episodes, he alleged.
While Toyota conducted a limited recall of some vehicles with floor mat issues in September 2009, the company delayed a broader recall until early 2010 - despite internal tests warning of the dangers posed by other, unrecalled vehicle models.
As Toyota admits in the Statement of Facts filed alongside the criminal information in this case, the company "made these misleading statements and undertook these actions of concealment as part of efforts to defend its brand," he said.
"In other words, Toyota confronted a public safety emergency as if it were a simple public relations problem. And they mounted this cover up despite widely-documented incidents, and even tragic accidents, like the one that took the lives of an off-duty California Highway Patrol Officer and members of his family," the Attorney General said.
Under the terms of the criminal information filed today, Toyota will also be charged with wire fraud.
The department will defer prosecution of Toyota for three years - provided that Toyota complies with the agreement in every respect and continues to fully cooperate with federal authorities.
"But let me be clear: the department has not, and will not, consent to foreclose criminal prosecution if the terms of this agreement are not rigorously honoured," Holder said.
