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Toyota Motor Corp. agreed Monday to pay a
record $16.4 million fine for failing to properly notify federal
authorities about a dangerous accelerator pedal defect. The auto
company said it had agreed to settle the civil penalty but denied
the government's allegation that it violated the law.

      Transportation Secretary Ray LaHood, announcing the largest-ever
penalty paid by an automaker to the U.S. government, said that "by
failing to report known safety problems as it is required to do
under the law, Toyota put consumers at risk."


      "I am pleased that Toyota has accepted responsibility for
violating its legal obligations to report any defects promptly,"
LaHood said, noting that the U.S. government was continuing to
investigate "whether the company has lived up to all its
disclosure obligations."


      Toyota said it agreed to the penalty "to avoid a protracted
dispute and possible litigation" but denied the government's
allegation that it violated the law.

      "We believe we made a good faith effort to investigate this
condition and develop an appropriate countermeasure. We have
acknowledged that we could have done a better job of sharing
relevant information within our global operations and outside the
company, but we did not try to hide a defect to avoid dealing with
a safety problem," Toyota said.

      The penalty is connected to a January recall of 2.3 million
vehicles with sticking accelerator pedals. The government says
Toyota knew about the problem in late September and failed to
report the potential safety defect within five business days, as
required by law.

      The fine does not free Toyota from potential civil and criminal
penalties. The Japanese auto company still faces dozens of personal
injury and wrongful death lawsuits in federal courts and federal
prosecutors and the Securities and Exchange Commission are
conducting investigations related to the recalls.

      From the government's viewpoint, the agreement to pay the full
fine constituted an acceptance of responsibility for hiding the
safety defect in violation of the law.

      Toyota announced it would recall 2.3 million vehicles in January
to address sticking pedals on popular vehicles such as the Camry
and Corolla. The Japanese automaker has recalled more than 8
million vehicles worldwide because of acceleration problems in
multiple models and braking issues in the Prius hybrid.

      The fine was based upon timelines provided by Toyota that showed
it had known about the sticky pedal defect at least since Sept. 29,
2009, when it issued repair procedures to distributors in 31
European countries to address complaints of sticking pedals, sudden
increases in engine RPM and unexpected vehicle acceleration.

      The documents also indicated that Toyota knew that owners in the
U.S. had experienced the same problems.

      The Japanese automaker has been weighing its options since the
fine was announced in early April but analysts expected it to pay
the penalty.

      "When you look at the toll it's taken on Toyota's reputation,
when you look at the number of vehicles involved, when you look at
the hardship it's placed on Toyota's customer base, it's only right
for Toyota to take this fine," said Dennis Virag, president of
Automotive Consulting Group based in Ann Arbor, Mich.

      The penalty is the largest the government can assess under law.
Without the cap, government lawyers said Toyota could have faced
fines of $13.8 billion, or $6,000 for each of 2.3 million vehicles
that were sold with defective pedals.

      Transportation officials have not ruled out additional fines.
The department is reviewing whether Toyota delayed for six weeks
the late January recall of the 2009-2010 Venza in the United States
to address floor mats that could entrap the accelerator pedal after
making a similar recall in Canada.

      Toyota recalled the Venza in Canada in December and reported to
the U.S. government on Dec. 16 that the floor mats could move
forward and interfere with the pedal. Toyota told U.S. authorities
at the time that the floor mats in question were not imported into
the U.S. but the Venza was added to the floor mat recall in late
January.

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Business and Economic News

The government said Monday that Toyota has
agreed to pay a record $16.4 million fine for failing to properly
notify federal authorities about a dangerous pedal defect.

U.S. Gov't says Toyota accepted record $16.4M fine

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