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Lawmakers Inflict More Pain on Toyota

U.S. lawmakers are building a case against Toyota, alleging that the world's largest automaker deceived the public into thinking that its recalls could solve its sudden acceleration problems.
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Updated from Monday, Feb. 22 to include comments from Toyota President Akio Toyoda

NEW YORK (

TheStreet

) -- U.S. lawmakers are building a substantial case against

Toyota

(TM) - Get Report

, alleging that the world's largest automaker deceived the public into thinking that its massive recalls could solve all its sudden acceleration problems.

One of the lead investigators looking into the

Toyota

complaints is Michigan Democratic representative Bart Stupak. In a letter to Toyota, Stupak said that a review of consumer complaints shows that contrary to what was communicated to the public, only 16% of complaints about sudden acceleration could be attributed to sticking pedals and faulty floor mats, according to the

Associated Press.

The company had used these problems as the blanket reason for all its sudden acceleration problems.

House investigators now say that Toyota has been covering up the core reason behind its accelerator problems -- an electronic flaw -- which would have been much more difficult and costly to fix. They have also alleged that the company had been reassuring the public about its accelerator problems using a flawed engineering report. Furthermore, a document is said to show that the company in the past had managed to salvage copious amounts of money by negotiating recall limits and auto safety rules with government regulators.

Toyota has defended itself regarding at least one of the documents.

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

Toyota says that it's currently cooperating with regulators to hand over requested documents relating to its accelerator problems.

On February 8, a federal grand jury in the Southern District of New York issued a subpoena that requested Toyota and its subsidiaries produce certain documents related to the unintended acceleration of Toyota vehicles and the braking system of the Prius; on February 19, Toyota received a request and subpoena from the Los Angeles office of the U.S. Securities and Exchange Commission seeking documents that include those related to the unintended acceleration and the company's disclosure policies and practices.

On Tuesday, Stupak will chair a House Energy and Commerce subcommittee hearing on Toyota's accelerator problems. Jim Lentz, president of Toyota Motor Sale, David Strickland, head of the National Highway Traffic Safety Administration and Transportation Secretary Ray LaHood are expected to testify at the hearing.

The president of Toyota, Akio Toyoda, is scheduled to testify in front on The House Oversight and Government Reform Committee's hearing on Wednesday.

"It is unlikely that we will learn anything ground breaking (or new for that matter) from Mr. Toyoda's testimony," analyst David Silver of Wall Street Strategies says. "I personally feel that the president of Toyota North America, Yoshi Inaba, would have more insight, but the PR nightmare that would have followed Mr. Toyoda shunning Congress would have overshadowed any additional insight and eventually the rebound for the company."

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In an opinion piece late Monday on the

Wall Street Journal's

Web site, Toyoda wrote the "past several months have been humbling for all of us at Toyota. We are taking this experience to heart, making fundamental changes in the way our company does business."

Toyoda wrote it's "clear to me that in recent years we didn't listen as carefully as we should -- or respond as quickly as we must --to our customers' concerns. While we investigated malfunctions in good faith, we focused too narrowly on technical issues without taking full account of how our customers use our vehicles."

-- Reported by Andrea Tse in New York

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