19 April 2010

Toyota to Pay $16.4 Million Fine

NY Times

Toyota is expected to tell the Transportation Department on Monday that it will pay a $16.4 million fine, the largest government penalty ever against an automaker, for concealing information related to its sticking pedal recall.

A senior Transportation Department official said late Sunday that legal documents were still being drafted, but Toyota executives were expected to sign them at the start of business Monday. The person spoke on the condition of anonymity because Toyota has not made its intentions public.

Toyota is not expected to admit wrongdoing, and the fine does not release Toyota from civil or criminal actions. Numerous lawsuits have been filed against the carmaker, by crash victims and relatives of people killed in crashes, seeking billions of dollars.

Toyota’s actions are also under investigation by the Justice Department and the Securities and Exchange Commission.

“By paying the full civil penalty, Toyota is accepting responsibility for hiding this safety defect,” the official said.

A Toyota spokesman, Mike Michels, declined to comment.

The fine is the maximum amount allowed by law. If not for that cap, Toyota could have been ordered to pay $13.8 billion instead — $6,000 for each of 2.3 million vehicles sold with defective pedals — the agency’s chief counsel told the company in a letter this month. The letter also said the agency was considering a second $16.4 million fine against Toyota, based on evidence suggesting the pedals might have had two separate defects.

An investigation into the company’s November recall of 5.4 million vehicles, to fix pedals that could become trapped under floor mats, could also result in additional fines.

The regulators, which received more than 70,000 pages of documents from Toyota, said company officials either knew or should have known the pedals were problematic for at least several months before announcing a recall Jan. 21. By law, automakers have five days after discovering a safety defect to begin a recall.

Toyota issued repair procedures in 31 European countries on Sept. 29, but executives in the United States told Congress that they did not know of reports of sticking pedals until January.

In mid-January, five days before the sticking pedal recall began, an American Toyota executive sent an e-mail message to colleagues in Japan urging them to “come clean” about the defective pedals. The company issued a recall after meeting with federal regulators Jan. 19.

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