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Bill George

Harvard Business School Professor, former Medtronic CEO

Foreign CEO Testimony a Rare Catch for Congress

Originally Posted in the Associated Press on Februrary 22, 2010.

Congress regularly hauls in U.S. chief executives for public interrogations, from tobacco CEOs claiming nicotine isn’t addictive to New York bankers defending their bonuses. But this week brings a rare catch — the head of a foreign company.

Toyota President Akio Toyoda will appear Wednesday in front of the House Committee on Oversight and Government Reform to explain safety problems that forced the world’s top automaker to recall 8.5 million of its most popular cars and trucks.

Foreign executives, beyond the reach of congressional subpoenas, usually try to avoid hearings that are often as much about public shaming as improving the public good. Often, the task is left to underlings more familiar with Washington or the issues under investigation.

That Toyoda agreed to testify after initially resisting an invitation is proof of how deep Toyota’s problems are. But the track record of the few foreign executives who have showed up on Capitol Hill illustrates the many pitfalls that Toyoda faces, and the lasting effects his performance could have on the company and his tenure.

“He will be in for a firestorm, but it is the honorable thing to do,” said Mark Zupan, dean of the University of Rochester’s business school. “It sends a big signal to actually show up on somebody else’s home turf.”

Congress does not have the legal authority to compel citizens of foreign countries to testify, according to Graham Wilson, a political scientist at Boston University who studies politics and business. But Toyoda, under enormous pressure to answer how long his company knew about safety problems and whether it did enough to solve them, likely had little choice but to accept an invitation from the committee last week.

Many analysts draw parallels between Toyoda and another Japanese auto executive who testified nearly 10 years ago over a similar safety debacle.

On Sept. 6, 2000, Masatoshi Ono went before House and Senate committees investigating blowouts that led to the recall of millions of tires made by his Bridgestone-Firestone company. It was a rare public appearance for Ono, who admitted he was nervous and had practiced his opening speech so that he could deliver it in English. He later used a translator for questions, most of which were fielded by two senior executives who sat with him.

The result was terrible. Ono apologized for deaths linked to the blowouts but could not provide an answer to why they happened. Lawmakers spent nearly 13 hours excoriating Ono and his company, the U.S. division of the Japanese Bridgestone rubber conglomerate. Sen. Barbara Mikulski, D-Md., even asked where his “sense of concern as a human being was.” A month later, Ono resigned.

“It was a disaster,” said Jason Vines, who was the top spokesman at the time for the Ford Motor Co., whose then-CEO, Jacques Nasser, was also grilled by Congress that day about his company’s role in crashes connected to blowouts.

Other foreign companies have tried different strategies during crises.

When Congress moved to block efforts by the Dubai-based DP World to acquire management rights to six U.S. ports, the company enlisted its chief operating officer, H. Edward Bilkey, a U.S. citizen, to testify on its behalf in February 2006.

The grandson of a senator, Bilkey told the Senate Commerce Committee that DP World would ensure security, a losing effort to allay lawmaker fears over ceding port control to a foreign nation following the terror attacks on Sept. 11, 2001. He also enlisted well-connected Washington lobbying firms to help make his case.

A month later, DP World agreed to transfer the U.S. operations to a domestic company. Bilkey died in July 2006 at age 72.

Akio Toyoda has held press conferences in Japan since the crisis broke several weeks ago, apologizing to consumers and promising to fix the problems of faulty brakes in the Prius hybrid and unintended acceleration in car brands like the Corolla and Camry.

But he will have to answer pointed questions from lawmakers during the hearing, which could present an awkward situation. It is unclear if Toyoda plans to use an interpreter, and his performance in English in some of the press conferences has been mixed. The company says he speaks the language well, but may get help to make sure his points are made clearly.

As an executive in Japan, where businesses are generally treated with reverence, he may also be unaccustomed to the grilling he will face, according to Harvard Business School and former Medtronic CEO Bill George.

But it will be a critical appearance for Toyoda to try to salvage both his own and Toyota’s reputation.

“When you are the grandson of the founder, you think you are protected,” George said. “But a crisis puts the job on the line.”

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