The settlement -- the largest criminal penalty imposed on a car company in U. S. history -- was announced by the Justice Department and Toyota this morning.
"Today we can say for certain that Toyota intentionally concealed information and misled the public about the safety issues behind these recalls," Attorney General Eric Holder said in announcing the settlement.
"Put simply, Toyota's conduct was shameful," he said.
The investigation was spearheaded by the U.S. Attorney's office and FBI in New York.
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Christopher Reynolds, chief legal officer, Toyota Motor North America, said in a statement this morning: "Entering this agreement, while difficult, is a major step toward putting this unfortunate chapter behind us. We remain extremely grateful to our customers who have continued to stand by Toyota.."
The settlement calls for the government to ultimately dismiss its case in exchange for Toyota's payment and continued cooperation. The deal also calls for an independent monitor how Toyota handles safety communications, its internal handling of accident reports and its processes preparing and communicating technical bulletins.
Toyota says it will record $1.2 billion in after-tax charges against earnings in the fiscal year ending March 31.
Some independent safety watchdogs sounded impressed.
The "settlement with Toyota is a game changer," says Clarence Ditlow of the Center for Auto Safety. "Until today, auto makers faced insignificant fines and no criminal penalties under the Vehicle Safety Act."
He points out, too, that if Toyota doesn't follow through, executives will face the threat of prison! .
The federal criminal probe was independent of lawsuits and federal safety regulator and congressional probes of the Toyota sudden acceleration recalls and looked strictly at whether Toyota provided false or incomplete statements to the National Highway Traffic Safety Administration. It also looked at how it handled complaints.
Toyota has already paid at least $1.6 billion to car owners for lawsuits in the cases and paid federal fines of $16.375 million in 2010 and a $17.35 million fine in 2012 for delays in safety defect reporting to NHTSA.
"While the (criminal probe) price tag represents a costly resolution, Toyota can put this issue behind it to fully focus on current and future challenges in a highly competitive market," says Karl Brauer, senior analyst for Kelley Blue Book, in a statement.
The cases involve instances in which Toyota accelerated when the drivers did not intend it, in essence, becoming runaway cars. After an off-duty California Highway Patrol officer and three passengers in a Lexus ES were killed near San Diego in 2009, other reports surfaced.
Toyota blamed floor mats that can jam under the gas pedal and potentially sticky accelerator mechanisms in several models and did multiple recalls covering both problems.
Safety experts also alleged that there were problems with the vehicles' engine electronics. But an extensive investigation by federal safety regulators found no evidence that that the electronics were at fault for unintended acceleration.
Still, some are unsatisfied.
"The coverup is still there on the electronics issue," says Sean Kane, an auto safety expert for Safety Research and Strategies. "This (government penalty) sends an important message, but it's a mixed message."
On one hand, he says, automakers are being told they need to be more diligent on safety issues and reporting them or face severe fines. On the other, government investigators never pushed engineering analyses hard enough to find the root cause of the s! udden acc! eleration cases.
Reynolds said in his statement, however, that Toyota has retooled in the wake of the recalls. "We have made fundamental changes across our global operations to become a more responsive company – listening better to our customers' needs and proactively taking action to serve them."
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