WRAPUP 2-Toyota faces U.S. criminal probe, lawmakers' ire

(For more on Toyota's safety recalls, click [ID:nN27231388])

* On eve of hearing, first sign of possible criminal probe

* Toyota appears to have dismissed failures - US panel

* Documents detail how Toyota beat back wider 2007 probe

By John Crawley and Kevin Krolicki

WASHINGTON, Feb 22 (Reuters) - Toyota Motor Corp (7203.T)
(TM.N) revealed it faces a U.S. criminal investigation into its
handling of the safety problems that led to massive vehicle
recalls, while a U.S. congressional panel accused it of making
apparently misleading statements.

Adding to the Japanese automaker's deepening crisis on
Monday, new documents detailing how Toyota beat back U.S.
safety regulators efforts for a wider probe in 2007 and
disclosure of a U.S. Securities and Exchange Commission request
for documents. [ID:nN22203240] [ID:nN22198413]

It all comes as Toyota's top executive, the grandson of the
company founder, prepares for a hearing on Capitol Hill over
unintended acceleration problems that have been linked to at
least five U.S. deaths, with 29 other fatality reports being
examined.

Akio Toyoda, who took the helm at the world No. 1 automaker
last June, is scheduled to testify before the U.S. House
Oversight and Government Reform Committee on Wednesday.

Toyota has recalled more than 8.5 million vehicles globally
in recent months for problems including sticky accelerators,
accelerators that can be pinned down by loose floor mats and a
braking glitch affecting its hybrid models.

It is also investigating reports of steering problems in
the Corolla, its second most popular U.S. model.

As the automaker girds for two days of congressional
hearings starting Tuesday, Toyota said on Monday it received a
federal grand jury subpoena from the U.S. attorney's office in
Manhattan on Feb. 8.

The Manhattan U.S. Attorney's office has one of the highest
profiles in the United States, with jurisdiction over some of
Wall Street's largest publicly traded companies. Toyota has
shares listed on the New York Stock Exchange.

The automaker also said the SEC had asked for documents
related to unintended acceleration of Toyota vehicles and the
company's disclosure policies.

Toyota said it would cooperate with the investigations.

William Johnson, a partner at Fried, Frank LLP in New
York, said often such inquiries boil down to what he described
as the "Watergate questions."

"What did you know and when did you know it? There are
variations of that, but that's the crux of the matter," said
Johnson, a former U.S. prosecutor and former SEC lawyer.

Daniel Margolis, a former federal prosecutor with Pillsbury
Winthrop Shaw Pittman LLP in New York, said a product recall
normally would not trigger a criminal investigation.

"They must have some information that leads them to believe
there is something worth investigating," Margolis said.

He added that prosecutors would likely focus on any false
statement the company may have made to a federal agency such as
the National Highway Traffic Safety Administration (NHTSA).

LAWMAKERS' CHARGE

Documents reviewed by Congress appear to show that Toyota
consistently dismissed the possibility that electronic failures
could be responsible for incidents of unintended acceleration,
two senior lawmakers investigating the matter said on Monday.

U.S. representatives Henry Waxman and Bart Stupak, chairmen
of the House Energy and Commerce Committee and the panel's
investigative subcommittee, respectively, also said in letters
to Toyota and U.S. regulators that the automaker's public
statements about the adequacy of its recent recalls "appear to
be misleading." [ID:nN22202284]

The lawmakers said the findings stem from a preliminary
review of documents provided to the committee by Toyota and
NHTSA.

Toyota said it was reviewing the letter from Waxman and
Stupak and continues to cooperate with the committee.

The U.S. Department of Transportation said NHTSA was well
versed in electronic throttle issues and had the expertise to
conduct those types of investigations.

Documents obtained by Reuters on Monday show U.S. safety
regulators considered a wider probe of acceleration risks on
Toyota vehicles and further safety steps as early as 2007, two
years before Toyota launched the first of its sweeping recalls.
[ID:nN22203240]

But NHTSA ended its probe of the issue in October 2007
without finding a defect at Toyota. It took that step despite
privately acknowledging consumer warnings of "extremely
dangerous" risks and the prospect that more Toyota vehicles
could be affected by acceleration problems.

The documents were provided to the Oversight and Government
Reform Committee by NHTSA as part of that panel's probe.

MORE HEADACHES

A 2009 document obtained by congressional investigators
that was released on Sunday showed Toyota's Washington D.C.
staff trumpeting over $100 million in savings from convincing
regulators to end their 2007 probe of sudden acceleration
complaints with a relatively cheap floor mat recall.

The document seems certain to add to the high-stakes debate
about whether Toyota missed or ignored complaints about sudden
acceleration in its vehicles and whether U.S. safety regulators
were tough enough.

Toyota, which has lost $30 billion in market value since
its recall crisis intensified on Jan. 21, reiterated on Sunday
that it was conducting a top-to-bottom review of all its
operations.

"Our first priority is the safety of our customers and to
conclude otherwise on the basis of one internal presentation is
wrong," the company said.

But the U.S. Department of Transportation said the document
highlighted Toyota's slow response to the safety problems.

"Unfortunately, this document is very telling," said
department spokeswoman Olivia Alair in an emailed statement.
(Additional reporting by David Bailey and Soyoung Kim in
Detroit, Grant McCool in New York, and Chang-Ran Kim, Yumiko
Nishitani and Yoshifumi Takemoto in Tokyo; Writing by Matthew
Lewis; Editing by Lincoln Feast, Jon Loades-Carter and Tim
Dobbyn)