United States District Judge William Pauley in federal court in Manhattan has approved a settlement agreement that entails Toyota Motor Corp. paying $1.2 billion to end a criminal investigation that resulted to the recall of over 10 million vehicles. The agreement represents the largest criminal penalty imposed on a carmaker in the US, according to Attorney General Eric Holder said.
As part of the settlement, Toyota admitted wrongdoing and agreed to pay the fine. It also agreed submit to “rigorous” review by an independent monitor. “This unfortunately is a case that demonstrates that corporate fraud can kill,” Pauley said. “I sincerely hope that this is not the end but rather a beginning to seek to hold those individuals responsible for making the decisions accountable.”
According to Pauley, the Toyota case presented a "reprehensible picture of corporate misconduct." Toyota was charged with wire fraud, which the government agreed not to prosecute for three years as long the Japanese carmaker cooperates with authorities. The recalls tarnished Toyota’s reputation and resulted to its dethronement as the largest carmaker in the world in terms of sale.
It reclaimed the crown after relinquishing it for a year to General Motors, which has recently recalled 1.6 million vehicles due to faulty ignition switches blamed for at least 12 deaths.
Toyota recalled over 10 million vehicles around the world in 2009 and 2010 due to complaints of sudden, unintended acceleration. The Japanese carmaker introduced modifications to gas pedals and floor mats that could shift around and jam the accelerator. Toyota also fitted brake override software on recalled models and has made the systems standard on newer models. [source: automotive news - sub. required]