Why Tire Rage Roils Venezuela

After he got the phone call informing him of his son’s death, Miguel Angel Sanguino did his sad duty.

He rushed to the mountain highway where the Ford Explorer had blown a tire and overturned, killing his 30-year-old son, Ivan, and a passenger. He accompanied the corpse to the morgue.

And when Sanguino went to the impound lot where the carcass of the vehicle had been towed, he felt another jolt of horror. It was an Explorer graveyard.

“It was very awful to go to that lot where the vehicle was and find more than a dozen wrecked Explorers,” said Sanguino, 54, a stocky businessman with an air of desolate dignity. “The same day of my son’s accident, another Explorer had a fatal crash. It’s as if a killer is in the street causing violent deaths of innocent people. I can’t say who the killer is, but I know he exists.”

Venezuela has experienced an alarming number of accidents blamed on failures of Firestone tires on Ford Explorers, recording at least 47 deaths compared with an estimated 69 in the United States. In the month since the death of Ivan Sanguino, the anguish and outrage of Venezuelans have echoed well beyond the borders of this South American nation of 24 million. An aggressive government response to the accidents has fueled the international uproar engulfing Ford Motor Co. and Bridgestone/Firestone Inc.

It is a particularly bad moment for confronting a corporate crisis in Venezuela.

Like elsewhere in Latin America, consumers here have long been accustomed to sometimes shoddy products and a fatalistic acceptance of misfortune. But then came the election in late 1998 of President Hugo Chavez, a former colonel who once led a military uprising.

Though often depicted as reckless and erratic, Chavez has invigorated his government’s regulatory apparatus and staffed it with “Chavistas” who echo his crusading populism. The Ford-Firestone case was their opportunity to pursue a long-held suspicion in the region: that some foreign corporate officials think they can get away with misdeeds in a small, crisis-ridden Latin American country.

This week, prosecutors here opened a criminal investigation based on a hard-hitting report by government consumer watchdogs who accused the companies of sharing blame for the problems and conspiring to conceal them. Venezuelan authorities have moved faster and further than their U.S. counterparts, but their David-versus-Goliath zeal has also raised questions about their professionalism.

Repercussions Show Changes in Venezuela

Venezuela’s front-line role shows how globalization can hurt companies as well as help them. Wilderness tires and Explorer vehicles are produced at plants in the industrial city of Valencia for sale in the region. If the Venezuelan allegations are true, they could widen the worldwide case and suggest the existence of fundamental design flaws. Already, information and cooperation are flowing back and forth among victims, lawyers and officials in the United States and Venezuela.

The cross-border repercussions reveal a changing Venezuela. Although Venezuelans have a colorful automotive culture and a U.S.-style appetite for sport-utility vehicles, there has been little consumer activism or legal redress for corporate misdeeds.

Yet Chavez, who is best known for revolutionary rhetoric and his embrace of Cuba’s Fidel Castro and Iraq’s Saddam Hussein, has brought quiet improvements of regulation in areas such as utilities, technology and industry, according to Janet Kelly, a public policy expert at the Institute of Advanced Management Studies here.

“Chavez has been painted as a kind of devil, this kind of crazy man,” Kelly said. “But there is this other side of the Chavez government which is more technocratic, more modern, which you see in some of the regulatory agencies. A lot of the best things the government has done have been on the regulatory side.”

Under this tightened scrutiny, Ford said this week it has replaced 62% of an estimated 140,700 Explorer tires under scrutiny in a recall here that began in May. And Bridgestone announced Monday that it will replace 62,000 Venezuelan-made tires on vehicles other than Explorers.

Nonetheless, the two companies heatedly contest the government watchdogs’ findings, which under Venezuelan law could result in charges of involuntary homicide against their executives. Ford in particular rejects a potentially explosive allegation: that a design flaw in the Explorer’s suspension played a key role in crashes.

In response, Ford officials propose the formation of a “high-level technical commission.” They question the depth of the two-month Venezuelan investigation, noting that more experienced, better-funded U.S. safety agencies are still at work.

“We are highly concerned about the tone of the report,” said Ricardo Tinoco, a Ford spokesman. “There is concern about the whole process of this investigation. We’re confident in the nature and design of our products.”

The self-styled Davids taking on the corporate Goliaths work for the Institute for the Defense and Education of Consumers and Users, known as INDECU. It handles complaints about everything from food safety to bad service in hotels.

The agency occupies a gloomy government complex in a concrete plaza full of vendors, discarded furniture and lines of long-faced citizens tangling with assorted bureaucracies. The spasms of a creaky elevator sometimes force employees to climb six flights of stairs to offices with missing light fixtures and exposed metal pipes on the ceilings.

“Look at this place--it looks like a slum,” Jorge Dominguez, the gregarious chief of the agency’s 26 inspectors, said with a resigned grin. “But we are giving it everything we’ve got. This has become an obsession for us, a healthy obsession. This is the first time in history that the government has taken on giant companies like this.”

Dominguez carries a badge with the number 007, a humorous gift from the agency’s chief, Samuel Ruh. Both are staunch Chavistas. They claim to have cleaned up a den of lethargy and graft in which former bosses used their jobs to get rich and kept a staff of 12 chauffeurs for two vehicles.

In contrast, Dominguez said his inspectors have worked around the clock on the Ford/Firestone affair and refuse to be intimidated. He scoffs at the understandable doubts about the watchdogs’ credentials: Dominguez is an agronomist, Ruh is a lawyer and former congressman and their technical expert is a former race car driver and tire salesman.

The case is big but not necessarily that complicated, Ruh said in an interview this week.

“The prosecutor said that after seeing the documentation, the investigation, the case seemed extremely easy to investigate,” Ruh said. “We are very calm. We have not said anything that we cannot prove.”

Safety Officials Allege Deceptive Spin in ’98

Sport-utility vehicles are popular in a region with big families and rough roads. And Venezuela has an especially rich car culture because the once-wealthy nation is among the world’s top oil producers.

Despite the economic collapse of the last 20 years, Venezuelans still treasure their cars. It helps that gas is cheaper than water here. Two kinds of vehicles dominate the streets: lumbering vintage gas-guzzlers driven by working-class families and sleek jeeps and mini-trucks used by the elite for excursions to beach resorts and country estates.

Venezuela is Ford’s fourth-biggest market in Latin America. Explorers have been built here since 1996 and sell for about $25,000. Venezuelans own most of the estimated 30,000 Explorers currently on the roads in Venezuela, Colombia and Ecuador.

As reconstructed by the INDECU report, the tragedy has its roots in 1995, when Firestone began producing Wilderness ATX tires at its Valencia plant. Two years later, according to the report, Ford made the tires standard on Explorers sold here.

In 1998, Ford became aware of accidents related to Wilderness tires in Venezuela and requested a report from Firestone, which conducted a probe and found no design or production problems, according to Ford officials. Continuing accidents prompted another investigation, in which Firestone technicians in the United States examined Venezuelan tires and concluded the causes were external factors such as bad roads, according to Ford.

The Venezuelan safety officials allege that deceptive conduct by the companies began in 1998. After “absolutely secret” meetings, according to the report, officials agreed in early 1999 to reinforce suspect tires with a fifth layer of nylon to prevent tread separation. The redesign plan proceeded “while Ford Explorer mini-trucks circulated with uninformed and unprotected drivers who had no idea of the danger,” the report said.

In a twist that watchdogs call both strange and sinister, however, thousands of tires labeled as reinforced actually did not have the fifth protective layer. Ford has expressed concern about the quality of the tires and the mislabeling.

In recent interviews with investigators, representatives of the companies pushed the blame at each other, according to Ruh. He said that neither corporation did enough to prevent accidents, which multiplied this year as tires aged.

“Why did neither of these two companies tell the consumers anything during all this time?” Ruh said. “That’s where there is a conspiracy.”

Corporate officials reply that the redesign was neither secret nor conspiratorial. The mislabeling was an innocent “stamping error,” according to Firestone, which insists the tires were safe regardless.

Ford officials, moreover, bristle at the allegation the vehicle has a “soft” and “highly unstable” suspension, as the report claims. Venezuelan safety officials accuse Ford of making surreptitious attempts to prevent rollovers by encouraging Explorer owners to install tougher shock absorbers and inflate tires to four pounds less pressure than the level recommended by Firestone.

Otherwise, though, the debate has not produced a solid explanation for the apparently high rate of accidents here, at least 74 in all.

The warm climate seems to have been a factor, as in the United States, Ruh said, citing a concentration of crashes in California and Florida. But he didn’t identify causes unique to Venezuela.

Whatever the truth, consumers remained in the dark, with brutal consequences.

“You pay all this money for a vehicle, and it turns out to be a rolling coffin,” said Jesus Ramirez, an army colonel. His wife has spent eight months recovering from a crash that killed a passenger and left her with a gruesome list of injuries: her jaw broken in three places, seven broken ribs, a deviated spine.

Search for Justice After ‘One Bad Day’

Ivan Sanguino bought his Explorer secondhand in 1997 and outfitted it with new Firestone tires in late 1998.

The vehicle didn’t get a lot of use. Ivan, a beefy young man with boundless energy, spent most of his time in Miami. He had gone there 10 years ago to study and later built a business selling cellular phones. The second of eight children, Ivan delighted in both worlds: Once a month, he made the short flight home to see his family.

“He had liked the United States ever since he was a little boy,” his father said. “He had achieved many things. He had many goals. He had an American girlfriend. And one bad day, he came back to Venezuela for a visit.”

Ivan flew into Caracas on a Thursday. He and a friend spent a long weekend in Morocoy, a beach town. On Aug. 7, a clear Monday morning, Ivan called his father during a stop for breakfast to say he was on his way back. He was driving in the hilly La Victoria area at 9:45 a.m. when the rear left tire exploded. The two men died instantly.

Since then, Miguel Angel has learned more than he ever imagined about automotive matters, regulators, the nuances of civil and criminal law in the United States and Venezuela.

Sanguino has been in touch with fellow relatives of victims represented by lawyers in the United States, where big-money judgments are far more frequent. He awaits the next move by prosecutors, who plan to question executives and visit factories before making a decision about charges that could come within about a month, according to consumer officials. In addition, the consumer agency can impose fines.

Sanguino does not yearn to see anyone in handcuffs. But one way or another, here or in the United States or both, he hopes for something that can be elusive in Latin America: justice.

“If any company or individual was responsible, it’s obvious that they should feel the full weight of the law,” he said. “This has been a massacre. It has to stop.”