Toyota Motor Corp's problems stemming from the recall of millions of vehicles deepened with the news that U.S. prosecutors and securities regulators have demanded information from the company.
As Toyota girds for two days of congressional hearings starting on Tuesday about the carmaker's handling of safety problems, Toyota and its subsidiaries received a subpoena from the U.S. attorney's office for the Southern District of New York on February 8, Toyota said in a statement.
The world's biggest automaker also said it had been asked by the U.S. Securities and Exchange Commission for documents related to unintended acceleration of Toyota vehicles.
Toyota has recalled more than 8.5 million vehicles globally in recent months for problems including sticky accelerators, accelerators that can be pinned down by loose floor mats and a braking glitch affecting its hybrid models.
U.S. regulators believe five deaths are associated with floor mats and are reviewing up to 29 other fatality reports to see if they are related to unintended acceleration.
One legal expert said he was not surprised that parallel criminal and civil probes had started given the huge news of the Toyota recall and the large number of people it has affected, but said subpoenas do not by any means indicate Toyota will be criminally or civilly charged.
You are looking to try and ascertain whether this company knowingly put out a product that is defective, or alternatively, when they learned they had a problem, whether they took prompt steps to try and correct it, said Phillip Stern, a former U.S. prosecutor and former SEC lawyer now with Neal Gerber Eisenberg law firm in Chicago.
This is just the first step, Stern said. You have to get there before you go down the next steps to really determine whether there is civil or criminal liability.
Toyota said it had received a request on February 19 to voluntarily submit certain documents from the Los Angeles office of the SEC. U.S. unit Toyota Motors Sales U.S.A. separately received a subpoena for related documents, including about the company's disclosure policies.
Toyota said it would cooperate with the investigations.
Akio Toyoda, Toyota Motor Corp president and grandson of the company founder, is scheduled to testify on Wednesday before a panel of the U.S. House Committee on Oversight and Government Reform.
Lawmakers will also hear this week from other Toyota executives as well as U.S. Transportation Secretary Ray LaHood. Tuesday's witnesses before the House Energy and Commerce Committee include Toyota U.S. sales chief Jim Lentz.
A document obtained by U.S. congressional investigators surfaced on Sunday claiming that the automaker saved more than $100 million by getting U.S. regulators to agree to a cheap fix for unintended acceleration problems.
The 2009 internal document shows Toyota's Washington D.C. staff trumpeting the savings by convincing regulators to end a 2007 investigation of sudden acceleration complaints with a relatively cheap floor mat recall.
The document seems certain to add to the high-stakes debate about whether Toyota missed or ignored complaints about sudden acceleration in its vehicles and whether U.S. safety regulators were tough enough.
Toyota, which has lost $30 billion in market value since its recall crisis intensified on January 21, reiterated on Sunday that it was conducting a top-to-bottom review of all its operations.
Our first priority is the safety of our customers and to conclude otherwise on the basis of one internal presentation is wrong, the company said.
But the U.S. Department of Transportation said the document highlighted Toyota's slow response to the safety problems.
Unfortunately, this document is very telling, said department spokeswoman Olivia Alair in an emailed statement.
Toyota has launched a publicity campaign to convince current and prospective customers that the company is addressing the problems. Its U.S. sales plummeted 16 percent in January and the company has estimated the recalls will cost it $2 billion at the operating level in the fiscal year ending March.
Toyota said it would temporarily halt production in France over the next two months due to soft sales, although it did not specify the number of idle days.
Japanese rival Mazda Motor Corp said it would not launch a special marketing campaign to draw customers away from Toyota, shunning a strategy used by other car makers keen to capitalize on Toyota's recall woes.
TOYODA TESTIMONY KEY
Toyoda, whose Washington testimony will come after he initially ruled out such an appearance, has acknowledged that the widely admired automaker let its standards slip during fast growth over the past decade.
The company has been tight-lipped about Toyoda's schedule, with a spokesman declining to confirm whether its president was already in the United States. Japanese media reported he had arrived in Washington and television showed images of his private jet.
Analysts said Toyoda's appearance in Washington will be a defining moment in whether, and how quickly, it can move beyond its safety crisis.
Congress is doing him a favor. He can be apologetic and be contrite and take responsibility and acknowledge that there have been some stress points in growth of the company, said Jeffrey Sonnenfeld, a Yale School of Management senior associate dean and an expert on corporate leadership.
(Additional reporting by David Bailey and Soyoung Kim in Detroit, Grant McCool in New York, and Chang-Ran Kim, Yumiko Nishitani and Yoshifumi Takemoto in Tokyo; Writing by Matthew Lewis; Editing by Lincoln Feast, Jon Loades-Carter and Tim Dobbyn)