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Criminal probe launched into Toyota's safety problems

WASHINGTON — Federal prosecutors have launched a criminal investigation into Toyota's safety troubles, the Japanese automaker confirmed Monday, as the company's leadership braces for tough questions in congressional hearings this week about its recent spate of recalls.

Toyota officials said the company received a subpoena from a federal grand jury in New York on Feb. 8 requesting documents related to unintended acceleration of some Toyota vehicles and the braking system of its popular Prius hybrid.

Toyota said it also received a subpoena and a voluntary request last Friday from the Los Angeles office of the Securities and Exchange Commission seeking documents related to the unintended acceleration of certain Toyota models as well as the company's disclosure policies and practices.

Toyota, in a written statement, said it would cooperate with the investigations.

The subpoenas come after Toyota turned over documents to committees in the Senate and House of Representatives over the weekend in preparation for three hearings that will focus on the acceleration issue, the role of the National Highway Traffic Safety Administration in investigating the problem, and whether the system or federal safety standards need to be adjusted.

The House Energy and Commerce Committee holds the first hearing on Tuesday. Toyota Chief Executive Akio Toyoda is scheduled to testify before the House Committee on Oversight and Government Reform on Wednesday. The Senate Commerce Committee will examine Toyota's woes next week.

"As for as this committee is concerned, the fact that Toyota is now the subject of a federal and SEC investigation does not in any way change our expectation for what we expect will be transparent and candid testimony from Mr. Toyoda . . ." said Rep. Darrell Issa, R-Calif., the ranking Republican on the House Oversight and Government Reform Committee. "If you haven't done anything wrong, then you have nothing to hide and there is no reason why Toyota should not be able to provide straightforward and honest testimony."

The subpoenas and documents released to Capitol Hill are already posing potential problems Toyota. A 2009 confidential document in which Toyota claims a victory in saving $100 million by negotiating a limited recall of 2007 Camry and Lexus ES models for sudden acceleration problems smacked of boasting to some House oversight committee members.

Dave Cole, the chairman of the non-profit Center for Automotive Research in Ann Arbor, Mich., said it's not unusual for car manufacturers to negotiate with regulators and to celebrate if the outcome works in their favor.

"But in the context of (Toyota's problems), it just doesn't look good," Cole said.

"It certainly raised eyebrows," said Kurt Bardella, an Issa spokesman. "Is there too cozy a relationship between (car) companies and regulators? It's clear that both Toyota and regulators failed in reporting the problem and correcting it."

A Toyota internal document turned over to the House oversight committee, and obtained by McClatchy, gives a wary assessment of the Obama administration and Democratic-majority Congress, calling them "not industry-friendly."

The document, a presentation, lists Washington's changing political environment as one of Toyota's key challenges because of an "Activist Administration & Congress — increasing laws & regulation."

The presentation also lists "Massive government support for Detroit automakers" as an obstacle for Toyota.

The hearings and Toyoda's testimony are high-stakes moments for Toyota, which operates several major assembly plants in the U.S., directly employs 34,400 American workers, and claims that parts and components for its vehicles are indirectly responsible for 163,700 American jobs.

The company, which gained a foothold in the U.S. on the perception that it made higher quality cars than its Detroit competitors did, is coming to Washington to defend its reputation.

"It's dark days for Toyota, for sure," said John Heitmann, a University of Dayton professor who specializes in automotive history. "This won't kill Toyota, but it will level them to a playing field they're not used to: Being just another car company like everyone else."

The committees also appear to have NHTSA in their crosshairs. Rep. Henry Waxman, D-Calif., the House Energy and Commerce Committee chair, and House Oversight and Investigations Subcommittee Chairman Bart Stupak, D-Mich., warned Transportation Secretary Ray LaHood in a letter Monday that he better be prepared to answer specific questions about NHTSA's inadequacies at Tuesday's hearing.

The letter states that NHTSA has received 2,600 complaints between 2000 and 2010 about sudden acceleration in Toyota vehicles but only opened "cursory investigation" in 2004.

Waxman also noted that "NHTSA appears to lack the technical expertise necessary to analyze whether incidents of sudden unintended acceleration are caused by defects in the cars' electronics systems."

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