Did Ford Mislead Congress?
Minutes after a Ford Motor Co. corporate jet landed at Washington's Dulles International Airport on Sept. 15, carrying more than a dozen crates of internal Ford documents, Congressional investigators began their hunt. For four days, they searched for evidence to back up Ford CEO Jacques Nasser's testimony that the company had tested the now-recalled Bridgestone/Firestone ATX and Wilderness tires in real-world conditions on Ford Explorers, a combination that has been implicated in 103 deaths.
But according to Hill investigators, they could find no such proof. There is "not one single document verifying that the Firestone tires in question were ever tested on the Ford Explorer" at the tire pressure recommended by Ford prior to July 2000, when news reports about tread separation first appeared, says Ken Johnson, a spokesman for Representative W.J. "Billy" Tauzin (R-La.), who is leading the House inquiry. Moreover, Ford admits that it can't find documents on many of the tests that were done.
The supposed absence of such testing data--and suspicions among some lawmakers that Ford misled them--was expected to take center stage at a fourth day of hearings set to take place on Sept. 21. Longer term, Congressional anger over what some representatives believe is a consistent lack of forthrightness by both Ford and Firestone is adding momentum to calls for tough new laws to rein in the auto maker and tiremaker. Not only is Congress weighing plans to impose strict new testing requirements; a push to bring criminal penalties for company executives who knowingly sell products that harm consumers is also gaining steam.
At the heart of the latest dispute: While Congressional investigators seem to think Ford did do some testing, they also appear to believe that Ford may have presented test results in a false light. Ford spokesman Jason Vines says the company conducted numerous tests, both in the lab and on outdoor tracks, and that the boxes of documents attest to this. Indeed, Ford followed up Nasser's Sept. 6 testimony with an affidavit by James D. Avouris, a light-truck specialist, in which he said Ford conducted tests in Arizona "by running the vehicle for 200 miles at a minimum of 90 miles per hour at ambient temperatures in the range of 90 degrees Fahrenheit...with tire pressure at both the front and rear set at 26 PSI." House investigators took this to mean that the vehicle in the test was an Explorer. Indeed, says Johnson, Ford attorneys later told Hill investigators that the test vehicle was an Explorer.
But on Sept. 19, Avouris told House aides in a phone call that the test vehicle was a pick-up truck, and not the Explorer. The tires were actually tested using what is known as a "mule" vehicle, which mimics the suspension and load-bearing capacity of a real car. In this case, it mimicked the performance of the Explorer, which wasn't yet ready for production. To Motown execs, that's normal. Says Jim Wangers, a senior consultant at Warren, Mich.-based Automotive Marketing Consultants Inc.: "Testing on mules--simulated vehicles--is the accepted practice in the industry."
CALL FOR CHARGES. House investigators didn't appear convinced. "This points up how difficult it's been" for the committee to get information out of Ford and Firestone, says Johnson. And he counters that Ford offers no evidence that post-production testing was ever done under real-world conditions either.
Regardless of the outcome of this latest flap, it is likely to fuel the growing debate over whether criminal charges are appropriate penalties for corporate misdeeds. Already, the Senate Commerce Committee on Sept. 20 unanimously approved a bill by Senator John McCain (R-Ariz.) that would increase civil penalties for corporate misdeeds--and allow criminal prosecution of corporate execs who willfully sell faulty products. The House is a step behind--but is likely to catch up when it proposes its own measures aimed at improving tire safety in late September. The two bills are likely to be combined. While Ford and other auto companies are lobbying hard to keep criminal penalties out of the House bill, Johnson is adamant: "Any attempts to short-circuit this legislation will fail."
Even if get-tough bills currently moving in Congress stall, the rising death toll in the Ford-Firestone scandal makes it likely that the Justice Dept. will look at criminal sanctions for the two companies, using existing statutes that allow prosecution for reckless endangerment. "If the Justice Dept. is not already looking at this very seriously, it will," promises Joseph E. diGenova, a former U.S. Attorney under President Bush.
Such threats aren't empty, either. True, criminal charges in product-liability cases used to be rare. Remember the Ford Pinto? At least 25 people died and hundreds more were injured in the 1970s because of a design that made the gas tank vulnerable to explosion from rear-end collisions. Although documents showed that executives were allegedly aware of the potential danger, only one prosecutor, in Elkhart County, Ind., tried to hold Ford or any of its executives criminally liable. And he failed: the threshold for showing willful misbehavior was too high.
NEW CLIMATE. But much has changed on the road from the Pinto to the Explorer. Criminal charges are now used with successful results in areas ranging from airline safety to workplace hazards. They were used against the cargo company that loaded explosive canisters onto a ValuJet plane that crashed in 1994, killing 110 people. And they were used in 1994 against a Massachusetts company that repeatedly failed to test parts it made for NASA's shuttle. "Many things that would have been civil wrongs just a few years ago have been criminalized," says attorney Jan L. Handzlik, chairman of the American Bar Assn.'s white-collar crime committee.
In fact, prosecutors have been waking up to the fact that criminal sanctions may be a more effective deterrent and punishment than the worst civil penalties. Conviction of a company can mean mandatory judicial oversight, debarment from doing business with the government, and a stain on the company's reputation for years. Conviction of an individual executive can lead to the ultimate indignity: jail time. As Washington (D.C.) trial lawyer Michael Hausfeld says: "Sometimes money just isn't enough."
For now, it's impossible to know if criminal charges are actually warranted against Ford or Firestone. But as the investigation continues to unfold--and the death toll rises--the call for prosecution will likely grow louder.