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Reno to review Firestone
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September 7, 2000: 11:34 p.m. ET
Tire maker could face criminal charges due to accidents, deaths
By Staff Writer John Chartier
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NEW YORK (CNNfn) - A day after lawmakers ripped into Bridgestone/Firestone officials over the company's handling of a 6.5 million tire recall, U.S. Attorney General Janet Reno said the Justice Department will review whether criminal charges are warranted against the tire maker.
Reno said Sen. Patrick Leahy, D-Vt., called on the department to review the tire problem blamed for at least 88 U.S. deaths, and whether Firestone and Ford officials learned about defects years before notifying the government.
 "We're reviewing everything to see what would be appropriate -- and that would include civil or criminal processes," Reno said. She said the department's attorneys are consulting with the National Highway Traffic Safety Administration (NHTSA) on the matter.
"As we said in Washington yesterday and have said all along, we are committed to working with government officials as we seek to find a solution to this issue," Christine Karbowiak, a Firestone spokeswoman, said in response to Reno's comments Thursday
Following Reno's comments Thursday, Firestone officials in Bogota, Colombia, said they would begin recalling mislabeled tires in that country beginning Sept. 15. Soraya Muriel, a Firestone official, said two models of Firestone tires have labels that say they are five-ply tires. The tires only have four plies, or layers of tread.
The tires being recalled in Bogota are not related to the U.S. recall, Firestone said, but do involve 15-inch Wilderness P-235-75 tires with both black and white lettering, as well as Wilderness P-255-70 16-inch tires with both black and white lettering.
Department of Justice spokesman Charles Miller said Thursday that NHTSA, which has jurisdiction over recalls and product defects, has not yet requested that the DOJ investigate the Firestone matter.
"We've had this request from Senator Leahy, and we're going to review it as we do all requests from the Hill," Miller said. "We're at the very beginning of our review to see if there's any action the Department should take."
Miller said he could not estimate when the Justice Department would complete its review.
Congress investigates recall
Reno's remarks came a day after House and Senate subcommittee hearings in Washington on whether tire maker Bridgestone/Firestone Inc. and Ford Motor Co. acted quickly enough on reports of tire failures. The failures have been linked to 88 deaths by U.S. regulators.
 Bridgestone/Firestone initially recalled 6.5 million 15-inch models of its ATX, ATX II and Wilderness AT tires on Aug. 9 because of numerous reports of tread separation problems. Most of the recalled models were manufactured at the company's Decatur, Ill., plant and installed as original equipment on Ford Explorers and other SUVs. As of Sept. 1, about 1.5 million of those tires had been replaced free of charge, Firestone said.
Also on Sept. 1, NHTSA issued an advisory on an additional 1.4 million tires. Firestone refused to recall the tires because it disagreed with NHTSA's data.
When did they know?
However, lawmakers were irked by what appears to be evidence that both companies actually learned of tire defects as early as 1993, when it began an overseas recall of tires that eventually extended to 18 countries before reaching the United States.
Lawmakers on Wednesday grilled both Ford and Firestone officials about a 1999 memo from Ford that surfaced Tuesday that may have suggested that Bridgestone/Firestone tried to keep defective tire information in Saudi Arabia from the U.S. government.
Federal authorities first learned of the tread separation problem from a news report on local Houston television station KHOU in February of this year. The report led NHTSA to make inquiries with Firestone and Ford ultimately resulting in the recall.
Since then, both companies have pointed fingers at each other, with Ford attempting to distance itself from the tire maker.
"Because tires are the only component of a vehicle that are separately warranted, Ford did not know -- I'll repeat that -- Ford did not know there was a defect [in the tire] until we virtually pried the information from Firestone's hands," Ford CEO Jac Nasser said in congressional testimony late Wednesday. [WAV 408KB] [AIFF 408KB]
Senators introduce stricter safety bills
A spokesman for Rep. Billy Tauzin R-La., who chaired the joint congressional subcommittee hearings on the recall, said Thursday that the next step now that the hearings are over is to obtain reports from both Ford and Firestone outlining their recommendations on the proper inflation pressure for the recalled tires.
"Both companies have indicated they will provide information to us. But if they don't, we'll be knocking on their door with a subpoena," Tauzin spokesman Ken Johnson said.
Tauzin, he said, is not likely to call for criminal or civil charges against either company, but instead will focus on making sure the government and public are notified sooner about product defects.
Both Joan Claybrook, president of Public Citizen and a former NHTSA administrator, and R. David Pitle, technical director of the Consumers Union, told a Senate panel Wednesday morning that criminal charges against both companies are warranted in this case. They also advocated a change in legislation requiring companies to immediately notify the government the moment it learns of product defects.
Two senators responded Thursday by introducing bills that would force greater disclosure and stiffen penalties for withholding safety data.
Leahy of Vermont introduced a measure that would require U.S. tire and automakers to notify federal regulators within two days of an overseas recall while Sen. Arlen Specter, R-Pa., introduced legislation to establish criminal penalties for executives who intentionally withhold information on defective products that kill or injure consumers.
"When there are simply monetary awards, they cost the company and they cost the shareholders, but it doesn't do anything to the individuals who make these decisions," Specter said from the Senate floor.
 Companies now only are subject to state criminal charges or civil lawsuits. Specter's bill would establish federal charges punishable by up to 15 years in prison for defects that lead to death and five years for injuries.
Last week, the head of the consumer protection agency in Venezuela recommended criminal charges against both companies there due to failures of the tires. Accidents involving Ford vehicles using the recalled tires have been linked to 46 Venezuelan deaths, according to authorities.
Shares of Ford (F: Research, Estimates) closed up 19 cents to $26.25 in trading Thursday. Bridgestone Corp., the Japanese parent of the tire maker, lost 52 yen, or 49 cents, to close at 1,265 yen, or $11.95, in Tokyo trading.
Coke learned the hard way
Other corporate giants are watching to see how Firestone handles the crisis. That includes Atlanta-based Coca Cola Co. (KO: Research, Estimates), which faced its own crisis last year after being forced to recall its products in Europe, as more than 200 people fell ill from drinking contaminated soda.
The company blamed the illness on poor quality carbon dioxide used to put fizz in drinks bottled in Antwerp, Belgium, and a chemical that contaminated the outside of cans at its plant in Dunkirk, France.
Although it waited a week to apologize to consumers, Coke eventually regained consumer confidence, and now sells more of its products in Belgium than it did at the time of the recall.
Although the company declined to comment specifically on Firestone's situation, spokesman Rob Baskin said Coke learned a few things from its own experiences.
First and foremost, divulge what you know as soon as you know it, he said.
"I think the key is to share the information you have when you have it with the public, with the press, with regulatory or governmental officials," Baskin said. "That's important, to be open and transparent with communications."
Coke said it was difficult to get a handle on the situation in a transformed media culture where Internet and broadcast news runs 24 hours a day, keeping companies that have issued product recalls under continuous scrutiny.
He said it's more challenging for companies now than at the time of Coke's own recall.
"It's just an interesting phenomenon that people are groping with today in terms of the fact news media never sleep," Baskin said.
Given that environment, Baskin said he came to appreciate the importance of being up front with both consumers and shareholders, telling them what you know as soon as you know it. 
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Bridgestone/Firestone
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