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Congresswoman with close ties to Toyota in recalls Investigation committee

By Poornima Weerasekara | 30 Mar 2010

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California – A congressional committee investigating Toyota’s nationwide recall includes a congresswoman who owns a chunk of shares in the company and owes much of her personal wealth to a family owned auto-accessories manufacturing outfit that supplies the embattled automaker.

Democratic Representative Jane Margaret Lakes Harman also represents Torrance, the district in California where Toyota has its Headquarters. California has a third of Toyota’s 35,838 U.S. jobs.

“The appearance of a conflict of interest created by Ms. Harmen’s appointment to the committee detracts from its overall credibility,” said Taylor Lincoln, Research Director at Public Citizen, a Washington based non-profit consumer advocacy group that puts auto safety as one of its priory areas.

Since last fall, Japanese auto manufacturer Toyota Motors has recalled some 8.5 million cars and trucks worldwide including over 6 million vehicles in the US because of defects that can cause sudden unintended acceleration or braking problems.

The House Energy and Commerce Committee appointed a subcommittee in January to review whether the National Highway Traffic Safety Administration acted aggressively enough toward Toyota. Ms. Harman was a member of the House Energy and Commerce Committee since 2000 when she re-entered national politics after losing the race to become California’s Governor in 1998.

Mr. Taylor, said that questions are being raised over why it took federal regulators so long to push Toyota to take action.

“The Detroit Press reported that in 2003 as many as twenty-seven Toyota owners alerted federal regulators about their cars surging unexpectedly and, in some instances, accelerating even more after they stepped on their brakes,” he said.

He also noted that two weeks ago, insurance giant State Farm, publicly acknowledged that it had alerted the National Highway Traffic Safety Administration as early as 2007 about safety issues with certain Toyota models

“Not once since the first complaints were filed did the National Highway Traffic Safety Administration subpoena records from Toyota until January this year,” Mr. Lincoln added. “Not enough questions are being raised by the congressional committee about why these early warnings were ignored.”

According to a study by the Center for Responsive Politics, a Washington based independent watchdog that tracks the money in US politics, Ms. Harman tops the list of congressmen who owns shares in Toyota personally.

In 2008 the most recent year for which members have filed financial disclosure statements, the value of her shares in Toyota ranged between $116,002 and $315,000. This shows a marked rise from the previous year’s amounts, between $1,000 and $15,000.  The analysis also showed that the second highest Toyota share owner was Rep. Michael McCaul from Texas, whose stake in the company is estimated between $15,001 to $50,000.

“Since 2008 filings are the most recent documents available, it’s possible that these politicians have sold their Toyota assets – or purchased more, for that matter – in recent months. Likewise, other elected officials may have also recently purchased Toyota-related assets,” said Dave Levinthal, Communications Director for Center for Responsive Politics said on an email interview.

According to a Centre for Responsive Politics analysis of the personal finances of Congressmen in 2008, Ms. Harman is the second richest member of Congress with an average net worth of $244million, about $7 million behind Republican Darrell Issa, whose average net worth was estimated at $251 million and also represents California.

“Harman International Industries, founded by Ms. Harman’s husband Sidney Harman, sells vehicle audio and entertainment systems to Toyota,” Mr. Levinthal said. “The two companies teamed up on a charitable education project in 2003, when Sidney Harman was Harman International’s executive chairman. He retired from the Harman board in December 2008,”

Ms. Harman denied having any “strong ties to Toyota.”

“The Senate’s lead Toyota investigator Jay Rockefeller (a democrat from West Virginia) personally lobbied with Toyota to build a plant in Buffalo in the early 1990’s,” Ms. Harman said. “Does that mean he will be biased during the investigation? No.”

“Toyota has been a valued business, that has contributed to the American economy positively for decades. Our investigation is to see how the National Highway Traffic Safety Administration behaved on safety concerns relating to Toyota.  In that context, I do not see any conflict of interest,” she said.

Toyota’s subsidiaries made a series of direct small contributions to Ms. Harman’s campaign in 2010. This includes $500 from subsidiary unit Toyota Motor Sales, $500 from Toyota Motorcars and only $250 from Toyota Corp. But the Automotive Free International Trade PAC, in which Toyota is a member gave $3,000 to Harman’s office and ranked 14th in her list of top 20 contributors.

Ms. Harman emphasized that the contributions to her campaign were legitimate and refused to comment on the status of her stock holdings in Toyota.

According to data available on opensecrets.org, a website by the run by the Centre for Responsive Politics that tracks the amount spent on lobbying, in the past five years, Toyota spent nearly $25 million lobbying the federal government, the most amount spent by a automaker in that period. The lobbing effort by competing Japanese automaker Nissan in the same period amounted to $15.54 million, while Honda spent $10.3 million.

“In 2009 alone, the company employed 31 federal lobbyists — including a former member of Congress and numerous ex-congressional staffers — and spent nearly $5.4 million to lobby the federal government,” Mr. Levinthal said.

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