Tuesday, June 23, 2015

If you don't know anything, you can't be lying: Commentary on Julie Hamp's hiring and her arrest

Julie's gone dark.

Why #1
Why did Akio need to hire Julie? The public reason is to give a Toyota a better public face. But there may be other reasons. Let's connect some dots. This is merely speculation...

Julie was hired in 2012, just during the final stages of Toyota's negotiations with the DOJ over the company's admitted wire fraud, and when they must have been discussing the terms of its deferred prosecution agreement. The terms of the DPA specify that Toyota may not engage in any crimes and that they must voluntarily disclose knowledge of safety defects. As I understand it, the DPA covers acts within the United States. That deal was finished and announced in March, 2013.

Consider the timing of Julie's hiring in 2012 and the timing of her elevation to officer status and move to Japan in 2014. She was becoming the face of Toyota. Having arrived from the outside, she did not know anything of the company's inside story of the true causes and cover-up of SUA.

At the same time, consider the elevation of TMS general counsel Chris Reynolds to Japan, where a new position of global general counsel was created for him (as reported in Corporate Counsel magazine.) I presume he knew the whole inside story about the SUA defects, and he is widely regarded as being Toyota's prime legal strategist and defender.

But now he is safe and the company is safer because his main office is in Japan.

If Akio's intent was to wipe the PR and legal slate clean, then he could get rid of those who were most involved, by having many of them retire and having people move to Japan. This allows him to work with a PR and legal team who are relatively unburdened by ethical dilemmas.

But either Julie herself or someone else has screwed it all up. I am pretty sure that despite the public backing she got from Akio, which was necessary to fill up the scandal coverage with Toyota-positive statements, in the end she cannot survive this debacle and her career at Toyota is over, even if she is ultimately exonerated. (That is unlikely, as Japanese prosecutors have a 99% conviction rate, and the police know how to extract confessions from a very high percentage of detainees...) If she is taken out as I expect, Toyota may be forced to employ a PR chief who actually knows what has gone on and what is still going on behind the scenes with ongoing unadmitted safety defects, and whose statements in response to crashes, lawsuits, and investigations might therefore carry a higher risk to the individual and also to the company if they are subsequently revealed as deliberate misrepresentations.

Addendum. This brings to mind the way that the Japanese company Olympus seems to have used a high-profile foreign executive, Michael Woodward, as its "face" during a period when the company had a lot to hide. Fortunately for him and unfortunately for the executives who were eventually prosecuted in Japan, he had been given the legal powers to uncover the company's fraud. And he had the moral integrity to make that public. I would hope that Toyota's new foreign executives will be able to follow in his footsteps...but somehow, I doubt that they will. 

To be continued...next time, continuing with my personal version of the "Five Whys"