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Toyota Faces U.S. Grand Jury Scrutiny Over Steering-Rod Defect

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July 21 (Bloomberg) -- Toyota Motor Corp., working to rebound from its worst recall crisis, said it faces further scrutiny over potential defects in vehicle steering rods.

A federal grand jury in New York issued Toyota a subpoena to provide documents related to flaws in steering relay rods, the company said in a filing yesterday. The National Highway Traffic Safety Administration said in May it opened an investigation into the matter.

“We’ll cooperate with the investigation,” Steve Curtis, a spokesman for Toyota’s U.S. unit, said in a phone interview. Toyota isn’t discussing specific models involved at this time, he said.

Toyota, the world’s largest automaker, has been under investigation this year by the Transportation Department and its NHTSA auto-safety regulator for responses to safety defects in the company’s cars and trucks. The automaker agreed in April to pay a record $16.4 million fine over a delayed defect notification for accelerator pedals that can stick.

The steering-rod flaw is separate from scrutiny of Toyota models for defects related to unintended acceleration. The Toyota City, Japan-based company recalled more than 8 million vehicles worldwide in the past year for floor mats that can accidentally jam accelerator pedals and to fix sticky gas pedals.

The office of the U.S. Attorney in Manhattan won’t confirm or deny whether there’s an investigation of the steering rods, spokeswoman Yusill Scribner said, citing agency policy. Toyota said in the filing it learned of the subpoena on June 29.

Agency’s Role

NHTSA and the Transportation Department didn’t have a role in the federal grand jury subpoena, the agency said in an e-mailed statement.

In 2004, Toyota recalled Hilux trucks in Japan with steering-relay rods prone to fatigue, cracks and possible breaks. At that time, Toyota told NHTSA in a letter that the defect was limited to vehicles in Japan and that it hadn’t received similar information from the U.S.

In 2005, Toyota told the agency that the steering-relay rod defect was in models sold in the U.S. and conducted a recall. NHTSA said last May that it was alerted to complaints filed with Toyota by U.S. consumers before the recall in Japan.

Toyota, in an Oct. 26, 2004, letter to NHTSA, said it was recalling 330,496 Hilux and Hilux Surf trucks in Japan because the steering-relay rods may crack “if the driver maneuvers the steering under conditions where there is high steering effort.”

U.S. Recall

Almost nine months later, Toyota recalled 977,839 4Runner, Toyota Trucks and Toyota T100s vehicles in the U.S. for the same defect.

“We all know the government has been investigating this,” John Kristensen, a lawyer suing Toyota, said yesterday. Kristensen, of O’Reilly Collins in San Mateo, California, represents the family of Michael Levi Stewart, 18, who died when his 1991 Toyota pickup truck rolled over into a ditch in Idaho on Sept. 15, 2007.

The lawsuit filed on behalf of Stewart’s family claims a defective steering relay rod led to the fatal accident. A trial in that case is scheduled to begin in November in state court in Los Angeles.

Kristensen said he hasn’t spoken to the New York grand jury. He said he shared information he collected in researching steering rod defects with the NHTSA.

Toyota’s American depositary receipts, equal to two ordinary shares, fell $1.03, or 1.45 percent, to $70.19 yesterday in New York Stock Exchange composite trading. The ADRs have fallen 16.6 percent this year.

To contact the reporters on this story: Alan Ohnsman in Los Angeles at aohnsman@bloomberg.net; Margaret Cronin Fisk in Southfield, Michigan, at mcfisk@bloomberg.net

To contact the editor responsible for this story: David E. Rovella at drovella@bloomberg.net

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