A former American Honda Motor Co. executive said last year that the Southern California car company's top Japanese executives must have known about wrongdoing, testimony at a bribery and kickback trial indicated Tuesday.
"There is no way the Japanese masters at American Honda did not know what was going on," prosecution witness Robert Rivers, a Palm Desert resident, was quoted telling the FBI.
American Honda insists it was the principal victim of a decade-long kickback scheme by a group of renegade executives. Prosecutors agree, citing lawsuits against the Torrance, Calif.-based company by dealers who did not get favorable treatment.
In response to a defense lawyer's questions Tuesday, Rivers said he did not remember making the statement to the FBI and said he has no personal knowledge that company brass knew about wrongdoing.
But Rivers testified that when American Honda President Koichi Amemiya learned that the company's top sales executive, Stanley James Cardiges, was taking kickbacks from dealers, he told Rivers to "keep it quiet or keep a handle on it." Rivers was top aide to Cardiges, a Laguna Hills resident who has pleaded guilty to felony fraud, racketeering and conspiracy charges in the case.
Amemiya fired Cardiges about a year before Cardiges was indicted and the kickback allegations began receiving widespread publicity, Rivers testified. The company statement on his resignation made no mention of kickbacks.
Cardiges now faces up to 35 years in prison and is expected to testify against two other former top American Honda executives, John Billmyer of Raleigh, N.C., and Dennis Josleyn of Penn Valley, Calif., who are accused of giving dealers favorable treatment in return for bribes.
Josleyn's lawyers are trying to establish that the company knew about kickbacks and bribes.
Lawyer Paul Twomey confronted Rivers with his statement to the FBI and got him to agree that, in Twomey's words, "Amemiya essentially said, 'I know about the kickbacks; that's not important now. We've got to concentrate on selling cars.' "
Rivers testified that in his years at American Honda, he received about $800,000 in kickbacks. He said one payment of $50,000 was to approve a California dealership in Elk Grove that did not meet company standards.
Rivers said Billmyer insinuated that others should keep quiet if they were being paid off.
"He specifically said we should be discreet in our relations with our dealers," Rivers said.
Rivers also testified that Cardiges told him Josleyn would "take care of us" if he would help get money from dealers for training seminars. Other witnesses have testified that the seminars, which cost almost $400 per participant, were worthless.
Rivers has pleaded guilty to racketeering and fraud-related charges. He faces up to 20 years in prison.
He said he was paid off for recommending people for Honda dealerships, which brought almost instant wealth in the 1980s when the cars were in strong demand and short supply.
He testified that Josleyn and Billmyer were among many executives who subscribed to an unwritten policy that it was all right to sell chances at dealerships, which were supposed to be awarded on merit.
Josleyn's lawyers, Twomey and Mark Sisti, are trying to show that American Honda considered the payoffs an unofficial perk. The company says it knew nothing about the payments.
Of 24 former executives and dealers indicted in the case, 20 have pleaded guilty. Two dealers have pleaded innocent and await trial. The case began when a New Hampshire dealer sued American Honda, claiming unfair treatment.
Honda is facing approximately 16 lawsuits, including a class action filed last month in federal court in Sacramento by plaintiffs who include former astronaut Frank Borman, according to attorney Thomas Keeling.