Toyota pays a record $1.2 billion to resolve criminal charges relating to safety issues
Toyota Motor Corp will pay a record $1.2 billion to resolve a criminal investigation into safety issues.
The settlement between the Justice Department and Toyota includes an admission by the auto manufacturer that it misled American consumers about two different problems that caused cars to accelerate even as drivers tried to slow them down.
It’s the largest ever penalty levied by US authorities on an auto company.
The agreement comes as General Motors is also under investigation over safety defects, and top officials said the Toyota settlement could serve as a template for similar cases.
“My hope and expectation is that this resolution will serve a model for how to approach future cases involving similarly situated companies,” Attorney General Eric Holder told a news conference on Wednesday, though he declined to discuss GM specifically.
Investigation still ongoing
The Toyota deal came as no surprise to the automaker and finally resolves issues that have hung over the company since 2007. Although the investigation at a government level has been resolved, the issues have been linked to at least five separate deaths and as such a number of private lawsuits are still ongoing.
Prosecutors filed criminal charges against the company but agreed to defer and drop them if the company allows an independent monitor to review its safety practices and if it abides by the terms of the deal.
Toyota is “effectively on probation for three years,” US Attorney Preet Bharara, whose office conducted the investigation, said at the news conference. “It cared more about savings than safety and more about its own brand and bottom line than the truth,” she said.
SEE MORE: Toyota wins dismissal of recall suit
Toyota will take a $1.2 billion after-tax charge for the settlement in the fiscal year ending March 31.
“Entering this agreement, while difficult, is a major step toward putting this unfortunate chapter behind us,” Toyota's North American legal chief Christopher Reynolds said in a statement.
A lengthy investigation
Toyota’s settlement resolves a long investigation conducted by US authorities, which has lasted more than four years. However, the first reported problem dates back to 2007 when the National Highway Traffic Safety Administration opened an enquiry regarding the Lexus ES350 model after reports of unintended acceleration by the vehicle. Lexus is made by Toyota.
The problems gained public attention in 2009, when a highway patrolman and his family were killed in a Lexus ES350 in San Diego. Subsequently Toyota recalled millions of vehicles, beginning in 2009.
But Toyota's statements about the recall misled the public because it didn't recall all the cars susceptible to the problems, caused by faulty floor mats, prosecutors said. A Toyota engineer concluded that the top-selling Corolla was among the worst vehicles for potential floor-mat entrapment, but the model wasn't included in the recall.
The company also concealed from the public and regulators another type of unintended acceleration caused by pedals getting stuck, officials said.
The company had canceled a design change to address the issue in the wake of the San Diego accident, prosecutors said. No individuals were charged as part of the settlement.
MORE ABOUT THIS STORY:
- Bloomberg Businessweek Toyota agree to $1.2 billion penalty ending US probe
- Reuters Toyota to pay $1.2 billion penalty over safety issues
- Huffington Post Toyata admits it deliberately misled the public
Marketing matters: from IBM to Kyndryl
Prior to joining Kyndryl as Chief Marketing Officer, Maria had a 25-year career at IBM, most recently as the tech giant’s CMO where she oversaw all marketing professionals and activities across North America, Canada and Latin America. She has held senior global marketing positions in a variety of disciplines and business units across IBM, most notably strategic initiatives in Smarter Cities and Watson Customer Engagement, as well as leading teams in services, business analytics, and mobile and industry solutions. She is known for her work with teams to leverage data, analytics and cloud technologies to build deeper engagements with customers and partners.
With a passion for marketing, business and people, and a recognized expert in data-driven marketing and brand engagement, Maria talks to Business Chief about her new role, her leadership style and what success means to her.
You've recently moved from IBM to Kyndryl, joining as CMO. Tell us about this exciting new role?
I’m Chief Marketing Officer for Kyndryl, the independent company that will be created following the separation from IBM of its Managed Infrastructure Services business, expected to occur by the end of 2021. My role is to plan, develop, and execute Kyndryl's marketing and advertising initiatives. This includes building a company culture and brand identity on which we base our marketing and advertising strategy.
We have an amazing opportunity ahead at Kyndryl to create a company brand that will stand apart in the market by leading with our people first. Once we are an independent company, each Kyndryl employee will advance the vital systems that power human progress. Our people are devoted, restless, empathetic, and anticipatory – key qualities needed as we build on existing customer relationships and cultivate new ones. Our people are at the heart of this business and I am deeply hopeful and excited for our future.
What experiences have helped prepare you for this new opportunity?
I’ve had a very rich and diverse career history at IBM that has lasted 25+ years. I started out in sales but landed explored opportunities at IBM in different roles, business units, geographies, and functions. Marketing and business are my passions and I landed on Marketing because it allowed me to utilize both my left and right brain, bringing together art and science. In college, I was no tonly a business major, but an art major. I love marketing because I can leverage my extensive knowledge of business, while also being able to think openly and creatively.
The opportunities I was given during my time at IBM and my natural curiosity have led me to the path I’m on now and there’s no better next career step than a once-in-a-lifetime-opportunity to help launch a company. The core of my role at Kyndryl is to create a culture centered on our people and growing up in my career at IBM has allowed me to see first-hand how to prioritize people and ensure they are at the heart of progress in everything Kyndryl will do.
How would you describe your leadership style?
I believe that people aren't your greatest assets, they are your only assets. My platform and background for leadership has always been grounded in authenticity to who I am and centered on diversity and inclusion. I immigrated to the US from Chile when I was 10 years old and so I know the power and beauty that comes from leaning into what makes you different from other people, and that's what I want every person in my marketing organization to feel – the value in bringing their most authentic self to work every day. The way our employees feel when they show up for themselves authentically is how they will also show up for our customers, and strong relationships drive growth.
I think this is especially true in light of a world forever changed by the pandemic. Living through such an unprecedented time has reinforced that we are all humans. We can't lead or care for one another without empathy and I think leaders everywhere have been reminded of this.
What’s the best leadership advice you’ve received?
When I was growing up as an immigrant in North Carolina, I often wanted to be just like everyone else. But my mother always told me: Be unique, be memorable – you have an authentic view and experience of the world that no one else will ever have, so don't try to be anyone else but you.
What does success look like to you?
I think the concept of success is multi-faceted. From a career perspective, being in a job where you're respected and appreciated, and where you can see how your contributions are providing value by motivating your teams to be better – that's success! From a personal perspective, there is no greater accomplishment than investing in the next generation. I love mentoring younger professionals – they are the future. I want my legacy as a leader to include providing value in work culture, but also in leaving a personal impact on the lives of professionals who will carry the workforce forward. Finding a position in life with a job and company that offers me a chance at all of that is what success looks like to me.
What advice would you give to your younger self just starting out in the industry?
I've always been a naturally curious person and it's easy for me to over-commit to projects that pique my interest. I've learned over years of practice how to manage that, so to my younger self I’d say… prioritize the things that are most important, and then become amazing at those things.