BOSTON (Reuters) - A Toyota Motor Corp 7203.T affiliate has sold its stake in a joint venture in Myanmar with the country's military regime, according to a letter sent to shareholder activists.
Managers of socially responsible investment firms including Trillium Asset Management in Boston and Domini Social Investments in New York have pressed Toyota for years to cut ties with the joint venture because of the country’s poor human rights record.
Toyota had the stake through its trading arm Toyota Tsusho Corp, or TTC. Toyota previously said TTC planned to wind down its business in Myanmar, which plans its first election in two decades next month.
But only in June did TTC sell all its shares in the joint venture and get approvals for the transaction, Toyota Motor North America told the investment firms in a letter dated August 12.
Other than a liaison office, “No other Toyota affiliate has any business, direct or indirect, with the Burmese government, to our knowledge,” wrote Toyota Motor Group Vice President James Wiseman. “TTC is now fully divested from its joint venture operations in Burma,” he wrote, using the name for the country still preferred by many in its democratic opposition.
Wiseman wrote that TTC made the decision “at their own business judgment as an independent company.” Toyota owns 20 percent of TTC. A Toyota spokesman confirmed the August letter on Monday.
Many U.S. and European companies cannot do business with Myanmar under sanctions such as those imposed by the United States since 2003. Asian countries have moved more slowly.
In a 2008 letter, Toyota told Trillium that it “shares your concerns about the human rights situation in Burma” and that it had asked TTC to “reconsider its business activities in the country.”
The operation was not a significant size for Toyota. Shin Furuya, lead researcher for Domini, estimated that it produced 12,000 vehicles in 2006. It is technically known as Myanmar Suzuki Motor, and its sales of autos and motorcycles were restricted to wealthier citizens in the poor country, and to its military, according to the activists.
“Toyota Motor has taken an important step to acknowledge and address human rights concerns within its sphere of influence,” Furuya said in a statement.
Domini and Trillium each manage around $900 million, much less than conventional mutual funds like Vanguard Group Inc and Fidelity Investments, each with more than $1 trillion.
Domini and Trillium said TTC is involved in other businesses in the country that could pose human rights problems. Furuya estimates that Suzuki Motor Corp 7269.T owned most of the joint venture and that his group would also prefer Suzuki to exit the business. A Suzuki spokesman did not immediately respond to questions.
The sale of the stake comes as Toyota has been trying to repair its reputation in the United States, its largest market. Toyota since last fall has been reeling from the worst safety crisis in its history, and had more than 10 million vehicles recalled worldwide.
Toyota also ran afoul of the United Auto Workers union when it closed a plant in California that it once operated with General Motors Co GM.UL.
Toyota said that once GM pulled out last summer, the plant could not be operated profitably.
The UAW has picketed Toyota dealerships because of the closing of the California plant, which was the site of the only unionized Toyota workers in the United States.
Reporting by Ross Kerber and Bernie Woodall. Editing by Robert MacMillan
Our Standards: The Thomson Reuters Trust Principles.