Regulators Hired by Toyota Helped Halt Investigations

[pauldun170]

Regulators Hired by Toyota Helped Halt Investigations
With assistance from Andrew Harris With Assistance From Andrew Harris
Fri Feb 12, 3:58 am ET

Feb. 12 (Bloomberg) -- Former regulators hired by Toyota Motor Corp. helped end at least four U.S. investigations of unintended acceleration by company vehicles in the last decade, warding off possible recalls, court and government records show.

Christopher Tinto, vice president of regulatory affairs in Toyota's Washington office, and Christopher Santucci, who works for Tinto, helped persuade the National Highway Traffic Safety Administration to end probes including those of 2002-2003 Toyota Camrys and Solaras, court documents show. Both men joined Toyota directly from NHTSA, Tinto in 1994 and Santucci in 2003.

While all automakers have employees who handle NHTSA issues, Toyota may be alone among the major companies in employing former agency staffers to do so. Spokesmen for General Motors Co., Ford Motor Co., Chrysler Group LLC and Honda Motor Co. all say their companies have no ex-NHTSA people who deal with the agency on defects.

Possible links between Toyota and NHTSA may fuel mounting criticism of their handling of defects in Toyota and Lexus models tied to 19 deaths between 2004 and 2009. Three congressional committees have scheduled hearings on the recalls.

"Toyota bamboozled NHTSA or NHTSA was bamboozled by itself," said Joan Claybrook, an auto safety advocate and former NHTSA administrator in the Jimmy Carter administration. "I think there is going to be a lot of heat on NHTSA over this."

‘Discussed Scope’

In one example of the Toyota aides' role, Santucci testified in a Michigan lawsuit that the company and NHTSA discussed limiting an examination of unintended acceleration complaints to incidents lasting less than a second.

“We discussed the scope” of the investigation, Santucci testified. “NHTSA’s concerns about the scope ultimately led to a decision by the agency to reduce that scope. You say it worked out well for Toyota, I think it worked out well for both the agency and Toyota.”

In an e-mailed response to questions about possible influence of former NHTSA employees on agency Toyota decisions, Transportation Department spokeswoman Olivia Alair said NHTSA “currently has three open investigations involving Toyota and is monitoring two major safety recalls involving Toyota vehicles. NHTSA’s record reflects that safety is its singular priority.”

Toyota City, Japan-based Toyota on Jan. 21 recalled 2.3 million U.S. cars and trucks with a potentially defective accelerator pedals. That followed Toyota’s decision in November to recall 4.48 million vehicles in the U.S. and Canada because floor mats might trap gas pedals while they were depressed.

Since that recall, Toyota's shares have dropped 17 percent, wiping out $27.7 billion in market capitalization. The stock rose 2 percent to 3,460 yen at the close of trading in Tokyo today.

Electronics Probe

Combined worldwide recalls for pedals, floor mats and a software fix to adjust brakes on the Prius and other hybrid models rose to more than 8 million vehicles as of Feb. 8.

"A recall is bad for any automaker because they have to admit there's a defect in their vehicle and the repairs can be expensive," said Rebecca Lindland, a forecaster at IHS Global Insight Inc. in Lexington, Massachusetts.

In Toyota's case, “the company has built itself on pillars of safety, quality and reliability,” she said. “A defect in their product is appalling to them, sort of unthinkable.”

All four of the probes the Toyota aides helped end were into complaints that the unintended acceleration was caused by flaws in the vehicles' electronic throttle systems. Toyota has denied that the system is a problem. U.S. Transportation Secretary Ray LaHood said on Feb. 3 that NHTSA is reviewing the electronics.

Toyota spokeswoman Martha Voss declined to make Santucci and Tinto available for comment.

‘Highest Standards’

“Anything Mr. Tinto and Mr. Santucci did was in the interest of full disclosure, transparency and openness with regulators and safety experts,” Voss said in an e-mailed statement.

“Their actions have been consistent with our efforts to maintain the highest professional and ethical standards in all of our legal and regulatory practices. Their paramount concern was for the safety of every single owner of one of our vehicles.”

The NHTSA decisions on Toyota weren’t necessarily biased just because former agency people were involved, said Sidney Shapiro, a law professor at Wake Forest University in Winston- Salem, North Carolina.

“I’m not sure regulators set out to say ‘I’m going to give a special deal to my old friends in the auto industry,’” he said. “But what happens is it just sort of deteriorates because these are the only people you talk to.”

Opposite Sides

There are no waiting-period requirements for moves to a company from its regulator for lower-level positions like those of Tinto and Santucci, said Allan Kam, former NHTSA senior enforcement attorney, who retired in 2000 after 25 years and said he was a “mentor” to Tinto at the agency. Santucci came to NHTSA after Kam’s retirement.

“They’re not supposed to deal with the agency about a matter they dealt with at the agency,” he said. Neither former NHTSA employee testified to any such conflicts when asked by attorneys.

Tinto, 46, came to Toyota after about four years at NHTSA. He hired Santucci from NHTSA in 2003, after the two met on opposite sides of the table in defect investigation cases, Santucci said in a deposition in the Michigan lawsuit.

Santucci, 39, works on most of the automaker’s recall petitions, he said in the deposition. In last year’s floor-mat recall, Santucci said he helped write Toyota’s explanation of the remedy and had phone calls and meetings with NHTSA to describe the automaker’s plans.

Cases Closed

NHTSA opened eight investigations of unintended acceleration of Toyota vehicles from 2003 to 2010, according to Safety Research & Strategies Inc., a Rehoboth, Massachusetts, group that gathers data from NHTSA and other sources for plaintiff’s attorneys and consumers. Three of the probes resulted in recalls for floor mats. Five were closed, meaning NHTSA found no evidence of a defect.

In four of the five cases that were closed, Tinto and Santucci worked with NHTSA on Toyota’s responses to the consumer complaints the agency was investigating, agency documents show.

The first closed case where NHTSA records show the involvement of Tinto and Santucci dealt with unanticipated acceleration by 2002 and 2003 Toyota Camrys and Solaras. The case, opened in March 2004, was the one Santucci testified about when he discussed limiting the scope of the probe. He did so in a deposition for a lawsuit filed on behalf of a Michigan woman who was killed in an April 2008 accident.

‘Blew Past’ Intersection

In that lawsuit, the family of Guadalupe Alberto, 76, says she died when her 2005 Toyota Camry sped out of control and crashed into a tree. The lawsuit blames a defect in the electronic throttle control, said attorney Edgar Heiskell, who represents the Alberto family.

“She blew past an intersection, witnesses saw her with both hands on the wheel,” Heiskell said. “She appeared to be standing on the brake while steering.”

On March 3, 2004, the agency told Toyota it was opening a preliminary investigation to determine “if the throttle control system could be the cause of vehicle surge or unwanted acceleration.”

Santucci and Tinto worked with Santucci’s former NHTSA co- workers, Scott Yon and Jeffrey Quandt, on the investigation, Santucci testified in his deposition. Yon and Quandt weren’t available for comment, Alair of the Transportation Department said.

‘Certainly, We Talked’

Twenty days after the probe began, NHTSA investigator Yon determined that the agency wouldn’t investigate “longer duration incidents involving uncontrollable acceleration where brake pedal application allegedly had no effect,” according to a document provided in the Michigan lawsuit.

“But that was after talking with you and Mr. Tinto, correct?” Heiskell asked during the deposition.

“Certainly, we talked to them in that time period,” Santucci said.

NHSTA opted to limit the investigation to unintended acceleration events that lasted less than a second and those where the brake could be used to control the vehicle, or about 11 incidents with 5 crashes. In Toyota’s initial response, Tinto identified 114 similar cases, according to NHTSA documents. The case was closed July 22, 2004, agency records show.

The agency decided to limit the cases to eliminate instances where a driver may have used the wrong pedal, the Transportation Department’s Alair said.

No Social Relationship

Santucci didn’t work on unintended acceleration cases involving Toyota while at NHTSA and doesn’t have a social relationship with former co-workers, he said in his deposition.

The second NHTSA-Toyota case settled with the automaker’s input was a 2005 investigation requested by the owner of a 2002 Toyota Camry who reported two instances of unintended acceleration, one involving a crash. The owner cited eight other complaints from other Toyota drivers about similar episodes, without identifying the vehicle make and model.

Toyota said dealer representatives investigated 59 of 100 vehicles whose owners complained.

“In each of these vehicles, no evidence of a system or component failure was found and the vehicles were operating as designed,” Tinto wrote in a Nov. 15 letter to NHSTA. He also cited the findings that ended the Camry investigation in 2004.

Water Corrosion

NHTSA ended its probe of the 2002 Camry in January 2006, citing lack of evidence of a problem and the agency’s need to allocate “limited resources” to other investigations.

Tinto also weighed in on a broader August 2006 complaint about the Camry, this time covering model years 2002 to 2006. In that case, Tinto wrote that Toyota had found no abnormality in the throttle actuator, or controller, which the petitioner blamed. In the defect investigation notice, NHSTA noted 3,546 cases where Toyota had replaced throttle actuators under warranty terms.

The automaker did find evidence that returned actuators had corroded due to water intrusion caused by circumstances “such as driving through a flooded road, in the heavy rain or a hurricane” and a drain hose was modified to prevent future water intrusion, Tinto wrote in a Dec. 20, 2006, letter to the agency.

NHTSA decided not to pursue the investigation, telling the owner “after reviewing the concerns raised by the petitioner and other information, NHTSA has concluded that further expenditure of the agency’s investigative issues raised by the petition in not warranted.”

Tacoma Pickups

In the fourth case, in 2008, Tinto told NHTSA the automaker couldn’t find enough evidence to support allegations of unintended acceleration in 2006-2007 Toyota Tacoma pickup trucks.

The owner reported two incidents of unintended acceleration in his 2006 Tacoma and pointed to 32 similar complaints in the NHTSA database.

Toyota itself received complaints of 478 incidents involving 431 Tacomas, for model years 2004 to 2008, that allegedly increased engine speed when the accelerator pedal wasn’t pushed, according to an April 25, 2008, memo by Tinto. Of those incidents, 49 resulted in a crash and 9 had injuries, he said.

After a review, Tinto said he disagreed that the complaints to NHSTA “in and of themselves justify opening an investigation” and said media attention to driver complaints contributed to the allegations.

“In Toyota’s view, neither the consumer complaints nor the field study indicate the existence of any defect in the subject vehicles, much less a safety-related defect,” he wrote.

Request Denied

NHTSA closed the investigation on Aug. 27, 2008, after an eight-month review, saying that “we have been unable to determine a cause related to throttle control or any underlying cause that gave rise to the complaint.”

Tinto also may have helped thwart an attempt by the owner of a 2007 Lexus ES350 to reopen a NHTSA investigation that resulted in a 55,000-unit recall for floor mat problems.

The owner, Jeffrey Pepski of Plymouth, Minnesota, said he experienced an unintended acceleration incident in February 2009 and wanted the agency to probe other possible causes, such as the electronic throttle.

Tinto’s response to NHTSA last May said the incident was Pepski’s fault because his floor mat wasn’t secured and that there was no need for a new investigation because the “limited number of such incidents does not suggest the existence of a safety-related defect in these vehicles.”

Seeking Toyoda

U.S. Transportation Department, NHTSA and Toyota officials have been asked to appear on Feb. 24 before the House Oversight and Government Reform Committee and Feb. 25 before the House Energy and Commerce Committee to talk about the recalls. The Senate Commerce Committee plans a hearing March 2.

“At the heart of the matter is determining whether Toyota acted as quickly as possible to notify regulators there was a problem and whether or not government acted as quickly and diligently as possible to investigate and act,” Representative Darrell Issa, a California Republican and ranking member of the House Committee on Oversight and Government Reform, said in a statement this week.

Issa called on Toyota President Akio Toyoda to appear before the Senate panel. “I would fully support the issuance of a subpoena” if Toyoda doesn’t cooperate, Issa said in a statement yesterday.

For Related News and Information: Legal news about Toyota: 7203 JT TCNI LAW Automaker earnings stories: TNI ERN AUT Toyota financial analysis: 7203 JT FA AUTO U.S. auto-industry fundamentals: IFS3