Sex scandal puts Toyota in the headlines

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Top U.S. exec allegedly groped assistant

By DIANA T. KURYLKO | AUTOMOTIVE NEWS

5/8/2006

NEW YORK - After months of torment, Sayaka Kobayashi says, she walked into the office of her boss at Toyota Motor North America Inc. on Dec. 12 thinking that his sexual harassment would end. At the very least, she wanted him to apologize.

The meeting with CEO Hideaki Otaka, 65, Toyota's top executive in North America, had been arranged by Toyota's second-in-command, Dennis Cuneo. But Otaka did not apologize to his executive assistant. Rather, Kobayashi alleges that Otaka criticized and humiliated her, calling her ungrateful for his efforts to advance her career. The 42-year-old employee says Otaka groped her on a business trip and in New York's Central Park, showered her with unwanted roses and jewelry, boasted about his marital infidelity and wanted her to have his child. And she contends that Toyota stonewalled her complaints.

Kobayashi gave her account of the meeting in a sexual harassment lawsuit filed on May 1 in New York Supreme Court and in a telephone interview with Automotive News. She seeks $190 million in damages from Otaka and Toyota.

The lawsuit got wide media play last week, an unusual black eye for a company accustomed to positive press. A New York Post headline blared: "Oh, What a Feeling! Toyota Boss Groped Me," an acerbic recycling of Toyota's old advertising tag line.

"My meeting with Mr. Otaka went totally different from what Dennis (Cuneo) told me it was going to be," Kobayashi told Automotive News last week. "That was shocking to me. If Mr. Otaka ever said anything - that he regrets (what he did) or apologized - I would have accepted that apology."

Weeks after the meeting with Otaka, the lawsuit alleges, the company reversed Kobayashi's recent promotion and later offered her compensation to leave the company.

Toyota's New York office issued a statement saying that it has "zero tolerance" for sexual harassment, and that it followed proper procedures after the complaint. The automaker also says it is "reassessing the effectiveness" of its policies.

"Subsequently she received a previously scheduled promotion and a raise, and at her written request was reassigned to another position," the company said in an e-mail response.

The company said it would not comment further on pending litigation. It has until May 20 to respond to the lawsuit.

Steven Curtin, a Toyota spokesman in New York, declined to confirm a report in The Wall Street Journal that Otaka would leave his job to become an in-house auditor at Daihatsu Motor Co. in Japan.

Otaka is a short man with salt-and-pepper hair who likes to be called Harry in the office. In 2004 he was appointed chief executive of Toyota Motor North America Inc., the holding company for Toyota in North America, based in New York.

Toyota Motor Sales U.S.A. and Toyota Motor Manufacturing North America report to Toyota in Japan.

Before 2004 Otaka was chief executive of Delphys, a marketing and advertising company owned by Toyota. He began his career with Toyota in 1965 and worked for Toyota Motor Sales U.S.A. in Washington, D.C., and California in the 1980s.

Two dozen roses

Kobayashi, a Japanese who moved to America in 1989, earned a journalism degree from Eastern Michigan University in 1994. Three years later she got a job writing and editing and handling logistics at the automaker's technical center in nearby Ann Arbor, Mich.

In 2003 she transferred to a corporate planning department job in New York, and in March 2005 she was offered the job of executive assistant. She considered the post to be an honor even though she had little secretarial experience. She speaks flawless English with just a hint of an accent.

The trouble started last summer when Otaka restructured his department so Kobayashi would report directly to him. To the astonishment of co-workers, she says, he personally delivered two dozen long-stemmed roses to her on her birthday in September.

The lawsuit outlines several alleged incidents:

During a business trip to Washington on Sept. 6, Otaka called Kobayashi to his room at 10 p.m., "forcibly grabbing her body and attempting to engage in sexual contact with her."

In October, Otaka sent an apologetic card and a garnet necklace to Kobayashi at her desk and proposed lunch.

A second groping occurred Nov. 14 in Central Park.

Later that month Kobayashi filed a sexual harassment complaint with Ko Takatsu, Toyota's vice president of human resources.

"The company obviously did not take any action to correct this problem," Kobayashi said in a telephone interview from her lawyer's office in New York. "It has been a very lonely procedure."

She says she did not turn to friends or colleagues for help "because I was still respecting Toyota's dignity and Mr. Otaka's dignity.

"Those three months for me were hell. I was living in a world of fear."

Did Toyota fail to act?

The lawsuit alleges Toyota's human resources department did not launch an investigation into the complaint.

On Dec. 6 Kobayashi turned to Cuneo, who runs human resources, accounting, advertising, public relations and investor relations.

After the Dec. 12 meeting in Otaka's office, Kobayashi felt some relief when Toyota announced her promotion on Dec. 22 to assistant manager. She got a raise but was still reporting to Otaka.

"I was thrilled," she said. "That was my first promotion in my entire career at Toyota."

But Kobayashi grew increasingly frustrated by Cuneo when her complaints against Otaka seemed to go nowhere. "Suddenly he wasn't responding to me anymore," she said. "Instead, the corporate attorney came to speak to me as instructed by Dennis."

Toyota declined a request to interview Cuneo.

According to the lawsuit, Alan Cohen, Toyota's North American general counsel, contacted Kobayashi on Jan. 4 with an offer of compensation to leave the company. She refused his offer to leave.

"My goal was to regain my old position (in planning) or to get away from Mr. Otaka," Kobayashi said. "So when the corporate attorney came and offered 'some kind of arrangement so you can go back to school full time,' that implies money."

Without explanation, Toyota subsequently reversed the Dec. 22 promotion and put her back into corporate planning, the lawsuit alleges. Kobayashi says she believes Toyota retaliated against her.

Kobayashi still is employed at Toyota but said she is on medical leave because of what her doctor diagnosed as a mild heart attack.

She says she believes Otaka behaved the way he did because she is Japanese. "Growing up in Japan, you will see discriminatory behavior against women all the time," she said. "It is an underlying culture in the society, and that reflects in the workplace, too."

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Automaker replaces top U.S. exec accused of sexual harassment

By DALE JEWETT | MARK RECHTIN | AUTOMOTIVE NEWS

5/9/2006

Toyota Motor Corp., moving quickly to squelch the bad publicity over charges of sexual harassment against its top executive in America, on Monday replaced that executive.

Jim Press, 59, president of Toyota Motor Sales U.S.A. Inc., has been promoted from the sales company to become president of Toyota Motor North America in New York. Respected as one of the brightest minds in the automotive business, Press will oversee the holding company for the corporation in America.

Also, Yuki Funo, 59, chairman and CEO of Toyota Motor Sales in Torrance, Calif., will add the titles of chairman and CEO of Toyota Motor North America. Funo's change takes effect immediately, Toyota said.

They will replace Hideaki Otaka, who has resigned as president and CEO of Toyota Motor North America.

Otaka, 65, was subject of allegations that over several months last year he twice groped and sexually harassed his executive assistant, Sayaka Kobayashi, 42. On Monday, May 1, Kobayashi sued Otaka and Toyota in New York Supreme Court, seeking $190 million. The lawsuit got widespread publicity.

Toyota Motor North America handles investor relations and government affairs for the automaker. It also coordinates messages on those areas from Toyota's sales and manufacturing operations in North America and the parent company in Japan. But it is not an operating company. Toyota's North American sales and manufacturing report directly to Japan.

At Toyota Motor Sales, Toyota Division General Manager Jim Lentz, 50, will become executive vice president and take over Press' operational duties. But Press' post of Toyota Motor Sales president will not be filled immediately, the automaker said.

The job changes for Press and Lentz must still be approved by Toyota's board of directors, which meets June 23.

Task force formed

In addition:

Former Secretary of Labor Alexis Herman will head a seven-person task force to review Toyota's sexual harassment policies and procedures. Herman is chairman of the automaker's Diversity Advisory Board. In addition to Herman, four other members of the task force are women.

All Toyota executives in the United States will be given special training "to enable them to better recognize, prevent and handle any instances of inappropriate behavior," the automaker said in a statement.

A policy change will now require that any charges of harassment or misconduct against a chairman, CEO or president of a Toyota affiliate be reported directly to the unit's board of directors.

The policy change is significant.

In her lawsuit, Kobayashi says she reported her allegations first to Ko Takatsu, Toyota Motor North America's vice president of human relations. But she says the company did not investigate.

Then in early December, Kobayashi says she took her complaints to Senior Vice President Dennis Cuneo, the second-highest executive in Toyota's New York office. Otaka was Cuneo's boss.

Kobayashi says Cuneo arranged a private meeting between her and Otaka. But instead of an apology, Otaka criticized and humiliated her.

Toyota's announcement of the executive changes makes no mention of Cuneo.

Toyota spokesman Irv Miller said, "From what I can tell, Dennis will continue to perform his job functions at TMNA. Other than that, I cannot comment."

In Toyota's announcement, Otaka said he expects "to be fully vindicated" in the lawsuit.

"I have regretfully come to the conclusion that my continued service as president would serve as a distraction and ultimately not be in the best interests of the company," Otaka said in a statement.

Otaka has withdrawn from being considered for a job as in-house auditor at Toyota affiliate Daihatsu Motor Co. in Japan. He will be a Toyota retiree, and won't pursue another job within Toyota until the legal case against him concludes, a company spokesman said.

Lentz on fast track

The personnel move is a major boost for fast-tracker Lentz, Toyota group vice president and Toyota Division's general manager.

While Lentz keeps the responsibility over Toyota Division, he also assumes all the operational oversight that Press previously held. His new corporate title will be executive vice president, instead of the president's title that Press held.

With this move, Lentz has vaulted past numerous other Toyota veterans in the executive hierarchy, an impressive move considering Lentz was working in the shadows just a few years ago.

Although he joined Toyota in 1982, Lentz first came to the public eye when he led the launch of the Scion youth brand in 2002, a position he surrendered to become vice president of Toyota Division marketing later that year. Lentz, 50, was promoted to his current job in March 2005.