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Quest Means Business

Toyota's CEO Akio Toyoda Testifies On Capitol Hill Today; Greek Public Workers Stage A General Strike

Aired February 24, 2010 - 14:00   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

JOHN DEFTERIOS, CNN INT'L. ANCHOR, QUEST MEANS BUSINESS: Time for Akio Toyoda, the president of Toyota, is about to be grilled by U.S. politicians.

Violence breaks out in Greece as workers protest against government cuts.

And we find out what his keeping Ben Bernanke awake at night; the state of the jobs market.

I'm John Defterios in for Richard Quest. This is QUEST MEANS BUSINESS.

We're expecting to hear from Akio Toyoda in just a moment. He is due to speak to U.S. lawmakers in Washington and he's likely to face a barrage of questions about the safety issues at the heart of a massive recall effecting 8 million cars worldwide.

In a prepared statement Toyoda will admit his company's rapid expansion came at the expense of safety. In a moment we'll be live, in Tokyo, with Kyung Lah, but first Maggie Lake has been watching the fireworks already erupting out of Toyoda's appearance. And she joins us now from New York.

Maggie, it is interesting because there has been a lot of speculation about what the statement would say, it is a very genteel statement, admitting to some guilt here right now. But we had some preliminary hearings and they are going very long. So the fireworks have started.

MAGGIE LAKE, CNN FINANCIAL CORRESPONDENT: That's right they have. And I have to tell you the person in the hot seat for most of the afternoon here and the center of attention is Ray LaHood. He is the U.S. Transportation secretary, and he came out right from the start vigorously defending the agencies, the safety agencies, in the U.S. And it is important to point out, they are under as much fire as Toyota; he, vigorously defending their record in front of lawmakers. Have a listen to the exchange.

(BEGIN VIDEO CLIP)

RAY LAHOOD, U.S. TRANSPORTATION SECRETARY: If you look at any speech I gave last year it was on safety, whether it was on trains, plains, or automobiles, it was on safety. That is our obligation to the public. I don't buy this argument that because, you know, the government owns 60 percent of GM that we are going to turn a blind's eye to that. That is nonsense. We would never do that. It will never happen under my watch. I guarantee you that.

(END VIDEO CLIP)

LAKE: Very interesting, John. This has been the tone, whether the U.S. government is giving GM, other domestic automakers, preferential treatment for safety problems they have had over Toyota. And I also think it is really fascinating to watch the way Ray LaHood has been conducting himself. He came out swinging. He has been aggressive, very confident, and confrontational with the politicians. Because he is one of them; he, himself, a U.S. politician. He is used to this venue and the manner of pointed questioning. And he is giving it back as good as he's giving it. Once again, it really puts into contrast just how unfamiliar this territory will be for Akio Toyoda, when he follows next.

DEFTERIOS: As they say in Washington, they are circling the wagons within the administration. Let's focus on Toyota here, though, because it has six plants in the United States, with one pending, for number seven in Mississippi. So, they are a job creator and some of those congressmen sit on this panel right here, so they don't want to sling too much mud at Mr. Toyoda, because they have been investing for the last 10 years.

LAKE: Absolutely. And this is a very important distinction that Akio Toyoda, himself, is expected to mention several times in his testimony. And it is something that has been currant throughout their advertising in the U.S. We have had governors coming out in support of Toyota, politicians around the U.S., in areas where they are a big manufacturer and actual employees themselves, there in Washington, to show their support.

So, the idea that they are not some big exporter, coming in, some foreign entity, that they are as much a U.S. automaker, as they are a Japanese automaker. It is very much been a point that Toyota has been trying to get across and it has not been lost on some of the people sitting in that panel. And that is part of the reason you are hearing them ask questions about whether Toyota is being treated as fairly as some of the domestic automakers. So, they have definitely got a lot of support out there as well as a lot of criticism that is going to be very pointed in this testimony coming up.

DEFTERIOS: Also on the Hill yesterday we heard from the head of the North American operations for Toyota, Mr. Lentz, and he was pointing the finger to Tokyo right now, saying that the communications have been very, very poor.

Another anecdote to this, though, is that you have to watch what you drive when you are a congressman. Many of these congressman drive Toyotas themselves, so they can't point the finger at anybody at this stage, right?

LAKE: That is right. They are one of the best-selling carmakers out there. And yesterday we were really sort of taken aback, because almost everyone of them started the testimony by talking about the car they own, the Toyota they own. There were Priuses, there were Highlanders, Camrys, you name it. So, you know that sort of, again, gives that sort of undercurrent of support, that they understand how popular they are, how widespread they are; but also, again, that feeling that so many people have, these cars, if there are safety issues out there it is also personal for these lawmakers as well.

So, he really has his job -Akio Toyoda-really has his job cut out for him today. He needs to reassure the lawmakers that things will change. That some of the communication with Tokyo, the way the company is run, will change. We know he is going to make that-that very stark admission that they grew too fast in order to keep the quality that has always been core to the company. He is going to have to lay out very detailed how things are going to change going forward. But importantly, he also needs to reassure all the customers out there. That is part of this PR job that he has today.

DEFTERIOS: OK, Maggie Lake, in New York. We are going to hear from Akio Toyoda, of course, within the hour. Before that time, it maybe in the middle of the night in Japan, but many people have stayed up to hear Mr. Toyoda speak, when he eventually takes the stand. Our Kyung Lah joins me now from Tokyo.

And Kyung Lah, I've been to Tokyo. In fact, I've been to those plants before. Tokyo City is Motor City in Japan, and how this is playing out there, in the market, is crucial to Japanese pride, is it not?

KYUNG LAH, CNN INT'L. CORRESPONDENT: It is, absolutely. It is tied to the Japanese personality. There are a lot of people here in Japan, just your everyday person, if you were to stop them and ask them about Toyota, there is pride here. Because this is a company that really rose from the ashes during World War II and really did lead this economy post-war. So, there is a lot of connection to the Japanese psyche and to the economy here as well, so, a lot of connection here.

There is a sense from the government as well. We have gotten a number of statements from the government throughout the week, various ministers saying that Akio Toyoda has got to perform. That they are expecting him, that the is going to be able to make U.S. lawmakers and U.S. consumers understand exactly where Toyota is coming from, to speak sincerely.

One of the editorials here today also said that this is really a make or break moment for Toyota, but it is also important for Japan Incorporated. Toyota, because of that pride that we are talking about, because of how much it represents here in this economy, as Toyota goes, so does Japan Incorporated, because it does represent so much about what all these other companies here produce for the global citizen, John.

DEFTERIOS: As you know, Kyung, many thought that he was very aloof, how he dealt with this crisis, that the answers coming from Tokyo and from the Motor City, were not coming out rapid enough. Has he been humble enough, in the view of the Japanese society, has he been contrite enough in the face of this crisis?

LAH: Let's look at first the response. And let's remember that in Japan the leadership that he showed is very different from what you would expect from the leadership in the U.K., in Europe, or in the United States. Leadership here is about consensus building. If there is a problem in your company, you, as a leaders, should sit back, allow your managers to figure out what is the problem, and then present your solution. So, what is perceived as being a lag in the Western world, not necessarily perceived as a lag here. So that is an important cultural difference.

As far as him being humble enough, certainly apologizing here in the Japanese community, is very important. He's done that. He has done that numerous times. We are expecting that yet again. Something that is very important here in Japan. So, has his apology been enough? Yes, in the minds of Japanese people, absolutely. A lot of people here are siding with Toyota right now, because one level it hasn't been necessarily a personal impact on many of the consumers here, because it hasn't directly affected the millions of drivers that we have seen in the United States. So, it has been a bit of a different story here in Japan, John.

DEFTERIOS: Out of curiosity, what has been the response from Nissan and from Honda so far? Have they sided with the automaker? Are they keeping a low profile within the Japanese market?

LAH: A bit of a low profile. And something, again, kind of distinguishing the difference between how Western companies are reacting, and how the companies here in the East are reacting. We haven't seen Nissan and Honda provide the incentives that we have seen from the U.S. automakers, like Ford and GM. Early on in the recall days we saw them providing those $1,000 incentives. Hey, drop off your Toyota, come buy and American car. That was seen as an underhanded, dirty trick here in Japan. That is not something that we have seen from Japanese corporations here. At least, the automakers.

DEFTERIOS: OK, thanks a lot for the analysis. I'm sure you will be waiting for Mr. Toyoda to take the stand as well. I know, even though it is in the middle of the night there. Kyung Lah reporting from Tokyo.

Now, let's get you up to date with the latest news headlines. For that we turn to Jim Clancy, who is sitting by at CNN Center, Jim.

(NEWSBREAK)

DEFTERIOS: Attacking the austerity drive, Greeks vote with their feet. Protestors hit the streets of the capital and run into confrontations with the police. We will have the latest, live from Athens, in just a moment.

(COMMERCIAL BREAK)

DEFTERIOS: Transport disrupted schools and offices closed, thousands of workers in Greece stayed away from work Wednesday. The general strike forced Athens airport to call of all departures and arrivals. It left some hospitals operating with emergency staff only. The 24-hour stoppage was called to protest the government austerity plan designed to reduce the country's massive debts. You know the story. Let's get the latest though, from Athens, and join Jim Boulden there.

Jim, let's start with the idea of the tone of this strike. This is a socialist government that is trying to put through austerity measures. In December of 2008 we had a strike last for 10 days. What was the tone of this one, today, so far?

JIM BOULDEN, CNN INT'L. CORRESPONDENT: Yes, this was a very important day for these unions, because you've got the public sector union, and the private sector unions getting together and making it very clear to this very popular government that they are not happy with these austerity measures. Public sector is saying they don't want to have their pay freezes. They don't want to have these structural changes to their pensions.

And this is critical for them to get out on the streets. Something like 30,000, 35,000 people according to the unions, marched through these streets. And though there was some violence with a splinter group, that wasn't the unions themselves.

Now, what is very interesting here is that this is not a strike that is supported by the majority of people here in Greece. And we spoke to one woman, today, who actually said that she had to strike because the government-sorry, the union told her she had to strike, but she did not want to march. And I asked her why that was and she said it was because that she felt that these changes must happen, that there is a generational change going on in Greece. And that these changes need to take place. Let's hear some of that interview.

(BEGIN VIDEO CLIP)

MIRKA POLYCHRONKI, PUBLIC SECTOR WORKER: I have to strike if the union says I will strike, but in fact, I didn't believe in that strike. Because I think that this is no time for strikes. I think it is time for working harder and earning money for the state. And that is my opinion.

BOULDEN: But your pension scheme will be changed? Your salary may be changed? Your pay freezes, everything that other public sector workers must go through?

POLYCHRONKI: I believe that this will be for the time being, but for now, it wont' be forever. I think the state-this country faces, really, hard problems with economy. So we have to first deal with our problems, and then find out how to do better with our pensions, and salaries, and security system. But first, I think, the problem is huge and we'll have to face it.

Elder people have worked so far, have worked hard, maybe, so they don't want to work even more, at this age, at this stage they are. So, I realize that there is a generation gap. It's unfair. People in Europe don't really know that the Greeks work a lot. Most of the Greeks I know work more than 10 hours a day. And we are hardworking people. Most of us have more than one job to deal with our lives.

(END VIDEO CLIP)

BOULDEN: What is interesting here, John, of course, is these people who are protesting, the ones who went on to the marches today, are protesting against the austerity measures already announced. As we know the European central bank and members of the IMF were here in Athens. And there is speculation, of course, that there will have to be even more measures taken, more austerity packages and more cuts, and more pain for the people of Greece in order for this country to bring its budget deficit back down, John.

DEFTERIOS: OK, Jim Boulden reporting for us in Athens. Thanks for the coverage throughout the day, as well, Jim.

We know that Akio Toyoda has just entered the room on Capitol Hill, to the U.S. House Oversights Committee. When he in fact starts to speak we will take him live and get you up to date with that story.

Let's continue on the Greek government. Under fire from the protestors for trying to cut spending; will be under fire from the European Union if cuts aren't deep enough. Spending cuts already announced are worth $2.8 billion a year. Here is what that means for the ordinary Greeks. Let's go ahead and take a look.

It is a wage freeze with perks cut out here. We are looking at a 14 months of pay per year for some of those Greeks. But right now we are looking at a 10 percent cut in allowances, that amounts to a pay cut, of course. Some government workers have been enjoying those 14 months for working 12, of course, that is the key point right now. This is a benefit we see in Spain, Portugal, some parts of Italy. It is something that has been taking place in Greece, of course. This is going to be trimmed back.

Also trimmed back, the retirement age; raising the retirement age to 63 by 2015. Currently the average age is 61. Many Greeks take early retirement. Civil servants can retire at the age of 54, as a matter of fact, once they put that time in. The Greek pension is one of the most generous in Europe, according to the OECD.

And then, Prime Minister Papandreou has been talking about cracking down on tax evasion which deprived their government of $20 billion a year, says "The Wall Street Journal". The fuel tax has been raised already and may be raised again and more earners will be paying the top income tax rate of 40 percent.

We have been keeping you up to date on the Toyota Motor story. Akio Toyoda, the president and chief executive officer is due to be speaking to the U.S. House Oversight Committee. We are going to go to that when, in fact, he does speak.

But first let's get some more insight on the Athens story, so to speak. And I'm joined in Athens by Miranda Xafa, she is the senior strategist for IJ Partners and joins us now, from just above Constitution Square, Syntagma Square.

Miranda, we had Jim Boulden talking about the popularity of moving forward with the cuts even though we have protestors on the street right now. I outlined the cuts that are on the table. At the end of the day, can Prime Minister Papandreou and his finance minister, Papaconstantinou, get these things in? They are fairly severe measures. Can he drive them home to meet the EU requirements, in your view?

MIRANDA XAFA, SR. STRATEGIST, IJ PARTNERS: Well, actually growth this year is likely to disappoint, because partly there is cuts in the credit from the banks, and also there is a barrage of new taxes, so growth this year is unlikely to exceed last year's minus 2 percent. And so the EU is now requesting additional measures amounting to 1.2 percent of GDP to make sure that this year's fiscal target will be met.

DEFTERIOS: (OFF MIC) Go now to the testimony we have been talking about since the top of the program, and that is the testimony of Akio Toyoda, he is the president and chief executive officer speaking to lawmakers in the House Oversight Committee. Let's listen in to his opening statement now.

(BEGIN LIVE FEED, IN PROGRESS)

(GAVEL SOUNDS)

REP. EDOLPHUS TOWNS (D-NY), CHRMN., OVERSIGHT & GOV'T. REFORM CMTE.: Our second panel-I would like to introduce our second panel, testifying on this panel, Mr. Akio Toyoda, president and CEO of Toyota Motor Corporation. And Mr. Inaba, president and CEO of Toyota Motors, North America.

Gentlemen, it is the committee's long-standing policy that all witnesses are sworn in. Please stand and raise your right hand as I administer the oath.

Do you solemnly swear to tell the truth, the whole truth, and nothing but the truth if so, answer in the affirmative.

Let the record reflect that the witnesses answered in the affirmative. You may be seated.

Let me begin by first welcoming you and I really appreciate the fact that you have come to testify and that Mr. Toyoda, that you actually volunteered to come and to testify. That, we want you to know, we are very impressed with that. That shows your commitment, of course, to safety as well. And we want to appreciate the fact that you volunteered to come.

Mr. Inaba, we welcome you here as well. And we have had conversations with you, you know, over the past few weeks and months. So, at this time we would ask you to testify-actually we will give you additional time. We generally give five minutes, but you know, being he is all the way from Japan we give him more time.

So, Mr. Toyoda. Yes, you may begin.

UNIDENTIFIED MALE: OK, his microphone.

AKIO TOYODA, PRESIDENT, CEO, TOYOTA MOTOR CORPORATION: Thank you Chairman Towns. I am Akio Toyoda of Toyota Motor Corporation.

I'd first like to state that I love cars as much as anyone. And I love Toyota as much as anyone. I'm here with my Toyota family of dealers, track (ph) team members, and friends. I take that most pleasure in offering vehicles that are our customers love and I know that Toyota's 200,000 team members, dealers and suppliers across America feel the same way.

However, in the past few months our customers have started to feel uncertain about the safety of Toyota's vehicles and I take full responsibility for that. Today I would like to explain to the American people, as well as our customers in the U.S., and around the world, how seriously Toyota takes the quality.

TOWNS: We ask, Mr. Toyoda, can you just pull the mic just a little closer to you? Thank you.

TOYODA: Today, I would like to explain to the American people as well as our customers in the U.S., and around the world, how seriously Toyota takes the quality and safety of its vehicles. I would like to express my appreciation to Chairman Towns and ranking member Issa, as well as the members of the House Oversight and Government Reform Committee, for giving me this opportunity to express my thoughts today.

I would like to focus my comments on three topics, Toyota's basic philosophy regarding quality control, the cause of the recalls, and how we will manage quality control going forward.

First, I want to discuss the philosophy of Toyota's quality control. I, myself, as well as Toyota am not perfect. At times we do find defects, but in such situations we always stop, strive to understand the problem, and make changes to improve farther. In the name of the company, it's long-standing tradition and pride, we never run away from our problems or pretend we don't notice them. By making continuous improvements we aim to continue offering even better products for society that is the core value we have kept closest to our hearts, since the founding days of the company.

At Toyota we believe the key to making quality products is to develop quality people. Each employee thinks about what he or she should do, continuously making improvements and by doing so makes even better cars. We have been actively engaged in developing people who share and can execute on this core value. It has been over 50 years since we began selling in this great country, and over 25 years since we started production here. And in the process we have been able to share this core value with the 200,000 people at Toyota operations, dealers, and suppliers in this country. That is what I am most proud of.

Second, I would like to discuss what caused the recall issues we are facing now. Toyota has for the past few years been expanding its business rapidly, quite frankly, I fear the pace at which we have grown may have been too quick. I would like to point out here that Toyota's priority has traditionally been the following. First, safety, second, quality, third, volume; these priorities became confused and we are not able to stop and think and make improvements as much as we were able to before. And our basic stance to listen to customers' voice to make better products has weakened somewhat. We pursued growth over the speed at which we are able to develop our people and our organization, and we should sincerely be mindful of that.

I regret that this has resulted in the safety issue described in the recalls we face today. And I am deeply sorry for any accident that Toyota drivers have experienced. Especially, I would like to extend my condolences to the members of the Saylor family, for the accident in San Diego. I would like to send my prayers again and I will do everything in my power to ensure that such a tragedy never happens again. Since last June, when I took office I have personally placed the highest priority on improving quality over quantity. And I will share that direction with our stakeholders, as you well know, I am the grandson of the founder and all the Toyota vehicles bear my name. For me, when the cars are damaged it is as though I am as well.

I, more than any one wish, for Toyota's cars to be safe and for our customers to feel safe when they use our vehicles. Under my leadership I would like to reaffirm our value of placing safety and quality the highest on our list of priorities, which we have held to firmly from the time we were founded. I will also strive to devise a system in which we can surely execute what we value.

Third, I would like to discuss how we plan to manage quality control as we go forward. Up to now any decision on conducting recalls have been made by the customer quality engineer division at Toyota Motor Corporation in Japan. This division confirms whether there are technical problems and makes decisions on the necessity of recalls. However, reflecting on the issues today, what we lacked was the customer perspective. To make improvements on this we will make the following changes to the recall decision-making process: When recall decisions are made a step will be added in the process to ensure that management will make responsible decisions from the perspective of customer safety first. To do that we will devise a system in which customers' voices around the world-

DEFTERIOS: We're now listening to Yoshimi Inaba, who is the president of Toyota North America. He was preceded by a very high profile and much anticipated testimony to the U.S. House Oversight Committee by Akio Toyoda, of course, the president and chief executive officer of Toyota Motors.

He came out and basically tried to clean his slate here before the U.S. House Oversight Committee to the chairman, saying: "We fear that the pace we have grown was too quick."

He followed up by saying that the priorities have become confused because of the fast growth that Toyota has seen in the U.S. market in the six states that it operates in right now and then concluded by saying that safety and quality are the -- at the highest list of his priorities going forward. He even puts his name on the brand, in fact, and said that he's a test driver himself and wants a very hands-on management approach in the future.

He concluded his comments by saying: "This is a personal commitment by me and because my name is on every single car."

He's -- he was very contrite there, at one stage, by saying: "We are deeply sorry as a company for the accidents," and he specified one accident for a family in San Diego and said he personally takes full responsibility for that.

This is a -- the testimony before the U.S. House Oversight Committee.

We're going to go back to the Q&A because of the questions coming from the various congressmen and congresswomen and because of the 200,000 employees linked and the eight million cars that have been recalled since the start of this corporate tragedy for Toyota.

We're going to take a short break.

QUEST MEANS BUSINESS continues right after this.

(COMMERCIAL BREAK)

DEFTERIOS: Welcome back.

I'm John Defterios in London and this is QUEST MEANS BUSINESS on CNN.

We've been listening to testimony -- very high profile testimony from two senior executives of the Toyota Motor Company, Mr. Yoshimi Inaba, who took the stand at the latest -- or second for the company, as the president of Toyota North America.

He was preceded by the grandson of the -- the founder. That, of course, is Akio Toyoda, who said he takes full responsibility for the recall of some eight million vehicles.

As you can see here, Mr. Inaba is in his continued statement to the U.S. House Oversight Committee. They're going to go to question and answer. And when they do, we'll check in with them to pick up that story.

Well, the two most powerful money men in America say the U.S. Economy is, perhaps, on the mend.

But how much is that?

Ben Bernanke and Timothy Geithner both said they have concerns about how to keep it on track.

The Fed chief is worried about jobs. Bernanke told lawmakers the labor market remains weak. Overall, he's looking ahead to a time when financial conditions will start to look a little bit more normal.

(BEGIN VIDEO CLIP)

BEN BERNANKE, FEDERAL RESERVE CHAIRMAN: Although the federal funds rate is likely to remain exceptionally low for an extended period, as the expansion matures, the Federal Reserve will, at some point, need to begin to tighten monetary conditions to prevent the development of inflationary pressures.

Notwithstanding a substantial increase in the size of its balance sheet associated with its purchases of Treasury and agency securities, we are confident that we have the tools we need to firm the stance (ph) of monetary policy at the appropriate time.

Most importantly, in October of 2008, the Congress gave statutory authority to the Federal Reserve to pay interest on banks' holdings of reserve balances at Federal Reserve banks. By increasing the interest rate on reserves, the Federal Reserve will be able to put significant upward pressure on all short-term interest rates.

(END VIDEO CLIP)

DEFTERIOS: Once again, Ben Bernanke at the U.S. Congress today.

The markets took cheer in that, of course, because he signaled that interest rates were not going to go up any time soon after that initial raise in the discount rate.

Meanwhile, U.S. Treasury Secretary Tim Geithner has been telling lawmakers he wants to see the banks contribute to the costs of the overall financial crisis.

(BEGIN VIDEO CLIP)

TIMOTHY GEITHNER, TREASURY SECRETARY: Although we have reduced those expected losses by more than $400 billion, we still -- we still face some risk of loss from the actions that we had to take to stabilize the financial system. And so what we did is propose that -- and I think this is a simple -- a very simple, fair thing.

What we proposed is to put a modest fee, spread out over 10 years, on the nation's largest banks that benefited most from the actions we took to make sure that we can look the American people in the eye and say you, as American taxpayers, will not have to bear a penny of costs for the actions we took to put out this financial mess.

(END VIDEO CLIP)

DEFTERIOS: Tim Geithner, of course, the U.S. Treasury secretary, preceded there by Ben Bernanke, the head of the Federal Reserve Board.

Let's go back to Capitol Hill again now and to the Toyota Motors testimony and the question and answer period taking place with Akio Toyoda, the grandson of the founder.

He's being questioned here by the chairman of the committee.

(LIVE FEED FROM CONGRESSIONAL HEARING)

DEFTERIOS: Once again, Akio Toyoda taking the questions there from the chairman of the U.S. House Oversight Committee. That's Edolphus Towns. The questions going through the process of maintaining quality control in the -- in the future.

The question and answers started about 10 minutes ago.

We're going to dip in and out of this coverage here on CNN when the news warrants.

Again, this is the testimony of Akio Toyoda, the grandson of the founder, who basically said that we grew too fast to sustain the safety and quality that we wanted to, quote, unquote: "Our priorities became confused. Our priorities became confused and safety and quality are at the highest list of priorities."

Again, that's the question and answer from Washington. And we'll go back to it when news warrants.

In a moment, the homecoming. For three months, Nigeria has been a country with an absentee president. Now he's well enough to return, but has the health of the economy suffered as a result, and, more importantly, oil production?

We'll have that story next.

(COMMERCIAL BREAK)

DEFTERIOS: He is back in his home country after a three month stay in hospital in Saudi Arabia. His long absence created a power vacuum and questions over who was really running the country.

Oil, of course, is the lifeblood of Nigeria, accounting for 90 percent of exports, with production of just over two million barrels a day.

Christian Purefoy now joins me from Lagos with the latest story here, which is very much intertwined with the oil business as it stands -- Christian.

CHRISTIAN PUREFOY, CNN CORRESPONDENT: Yes, John, today there's been a -- well, the latest development today. There's been a statement put out by the presidency that says that the acting president, the vice president will continue to govern while the president recovers.

He came in early this morning, but he doesn't seem in any fit state to govern, John. He came with -- he came from the airport to the presidential villa in an ambulance, and nobody's seen him, like they haven't seen him in the last three months. And people are worried, though, that this is not good for business, because his return has sparked another continuing crisis in the constitution, because the vice president isn't actually constitutionally legal just yet -- John.

DEFTERIOS: In fact, the U.S. State Department thought that return of President Yar'Adua was a move to destabilize the country. In fact, many were just getting used to the concept that the vice president, Goodluck Jonathan, was going to be able to tackle the Niger Delta, where he's from, and try to reach a peace settlement so they could invest in their oil industry yet again.

And this is the big question mark going forward, is it not, Christian?

PUREFOY: It is. And the whole situation, john, is very confusing for anyone around the world, even if you're in Nigeria, even particularly now even if you're in the capital, Abuja.

And the U.S. consulate issued a very strongly worded statement, saying that they hope that Yar'Adua's return, in whatever state he is, is not a ploy by his ministers to try and create an unstable situation.

Business here and in America and the rest of the world and Nigerians, John, they want a stable situation in Nigeria. That doesn't exist just yet. But it does seem that energy policy, whatever happens, whether it's Goodluck Jonathan, the acting president right now, or President Yar'Adua, is going to continue along the same lines.

They're trying to push through a big petroleum industry bill. It's an overhaul -- probably the biggest overhaul in Nigerian oil industry in that Niger Delta region for about 50 years.

The oil majors, on one hand -- Shell and Chevron -- are saying that this big petroleum industry, it's caused a lot of problems -- a big public spat, if you like, between the government and the oil majors. The oil majors are saying it's going to ruin -- drive away $50 billion worth of investment, while the government, on the one hand, are saying no, that is not the case.

Whatever the case, though, John, at the moment, Nigeria's oil industry is in trouble. It's now being surpassed by Angola -- John.

DEFTERIOS: Yes, in fact, they have 37 billion barrels of reserves, so they're the second largest reserves. It's just getting it -- that oil off and out of the ground.

I saw that Total, the petro oil giant, has invested in the Aqua Field and it's quite promising for a country that's producing about two to 2.2 million barrels a day, they want to take it up by 600,000 barrels a day by the year 2013.

Is that realistic considering the political paralysis that we see today and the oil law that you've talked about -- Christian?

PUREFOY: The sort of investment, John, that Total is trying to bring in is offshore Nigeria, seven miles offshore, out of that oil rich Niger Delta region, which is a -- the third made -- largest wetlands in the world. And you've got militants, you've got a deteriorating pipelines, infrastructure. But offshore, you've got a whole new fresh set of oil fields.

And what these oil companies are trying to do is take off these big -- they're called FDSOs, floating production service vessels -- pumping out the oil from deep underwater into there and you just put it straight into a tanker offshore. You don't have to deal with any of the onshore problems.

And that's what the oil companies want to do. And they think if they can do that -- and most of the problems they deal with onshore, as I said, militancy, deteriorating infrastructure -- they won't have to deal with that.

So putting -- pumping in money offshore does seem realistic. But they are saying that even that money is under threat, John, if this petroleum industry bill goes through, because they're saying higher taxes that the government is saying they're going to introduce will simply drive the investment away -- John.

DEFTERIOS: OK. Thanks for the thorough analysis.

Christian Purefoy joining us from Lagos today with the return of the president of Nigeria and the scrambling that's going to take place within that cabinet.

We'll have an update on the Toyota testimony on Capitol Hill when QUEST MEANS BUSINESS continues right after this short break.

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(LIVE FEED FROM CONGRESSIONAL HEARING)

DEFTERIOS: Some highly charged testimony here from Akio Toyoda, the president and chief executive officer of Toyota Motor Company.

He was joined there on Capitol Hill by Yoshimi Inaba, who runs the North American operations for the group.

This was an effort -- now, you can't overlook the public relations effort nor the high charged politics unfolding in Washington under Chairman Towns.

Mr. Toyota basically apologizing, in fact, singling out certain accidents, for example, in San Diego, and said that the basic philosophy was skewered because of the fast pace of growth. Safety and quality was the highest on the list of priorities going forward. He said this is something he'll rectify himself with much greater hands-on management.

Akio Toyoda. We'll go back to the Q&A throughout the coverage here on CNN.

That's all for the coverage of QUEST MEANS BUSINESS.

We're going to go to the headlines and "AMANPOUR" is straight ahead.

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