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Toyota Motor Corp. this week flew in more than 100 of its U.S. employees for an annual lobbying visit to tout the company and discuss its broad legislative agenda before Congress. Such “fly-ins” are common for big companies and trade groups, but Toyota’s timing this year couldn’t have been more auspicious.

By the time the company’s employees arrived in Washington, D.C., a Republican Senator had just fired off a letter denouncing the company in unusually harsh terms.

Sen. Gordon Smith (R-Ore.) last week sent a letter to Toyota’s chairman, Hiroshi Okuda, in which he said, ‘It was with great distress that I learned that Toyota plans to build and sell automobiles, as well as support more than 70 dealerships, in the Islamic Republic of Iran.” The U.S. State Department lists Iran as a state sponsor of terror.

Chris Matthews, a spokesman for Smith, said his boss wrote the letter after reading press accounts of Toyota’s growing interest in the Iranian market.

But a spokeswoman for Toyota said the letter cites inaccurate data.

Martha Voss, a Washington-based spokeswoman for Toyota, said, “I can’t talk about future plans because we never do. But certainly to date, as far as we know, there is no plan to establish a dealer network or a production facility” in Iran.

Voss dismissed what had been reported in multiple media stories this year, including a Financial Times article from March that said the company planned to expand in Iran.

“As we investigated, it turns out that Toyota has no dealer network there,” Voss said. “There is no plant there, no production facility, and no plan to have a production facility.”

She added that other car companies do have facilities in Iran and “I’m confused about how we’re getting singled out.”

Voss said her company has not been in touch directly with Smith and has not yet written back. She added that Toyota has been selling in Iran since 1970 and that last year’s sales amount to more than 300 vehicles, which represents 0.03 percent of the market share.

“We comply with all laws when it comes to selling those vehicles. We understand the sensitivity of Iran,” she said.

In his letter, Smith noted that “Toyota Motor Corporation has recently highlighted its commitment to making a positive contribution to the U.S. economy and as your advertising campaign states, ‘investing in the places where we do business.’ This pledge is especially meaningful given the millions of automobiles your company sells in North America.”

However, the letter goes on to say, “As a member of the international business community, Toyota’s decision to do business in Iran is not only inappropriate, but also immoral. Seeking business advantages at the expense of America’s security is antithetical to the values for which our country stands, particularly if a company seeks job subsidies, tax incentives, and preferential tax treatment from the U.S. government.”

In another sign of conflict during Toyota’s fly-in, Jim Doyle, who served as deputy chief of staff to then-Commerce Secretary William Daley during the Clinton administration, is launching a new group in the coming weeks that aims to shine the spotlight on auto manufacturers and their business practices.

Doyle decided to kick off his efforts by targeting Toyota during its lobbying week. He said that what prompted him to organize his soon-to-be group was the foreign-owned automakers touting their domestic commitment and positive effects on the U.S. economy.

In recent months, Toyota and other foreign makers have promoted their investments in the United States. According to Voss, Toyota provides 386,000 jobs in the United States and has made a total investment in the U.S. economy of $13.4 billion over the years. The company has plants in several states including Kentucky and Alabama, and it has a new facility on its way near San Antonio.

“We need to be at the table as decisions are being made about the auto industry,” Voss said. “We feel it’s important that the Members understand what kind of subjects might impact their constituents. We have been spreading that message and we’re proud of it.”

Earlier this year the Association of International Automobile Manufacturers, along with lobbyists from its member companies such as Toyota and Honda, released a study touting the benefits the foreign-owned automakers have on the U.S. economy.

At that event, Rep. Henry Cuellar (D-Texas) said: “Toyota has set the bar for what it means to be a good corporate citizen. We want to be your friends in Congress … your champions, your ambassadors.” Cuellar did not return a call for this story.

“My member companies are building in this country more and more of the vehicles they sell in this country,” said Timothy MacCarthy, president of AIAM. “The spin-off effect on the economy of opening an auto or truck plant is beyond belief.”

But Doyle has not been convinced by the automaker’s claims.

“My response was, ‘Fine if you’re going to try to sell ‘American,’ then you have to play by the same rules: Don’t do business with terrorist regimes,’” he said. Toyota’s “ads proclaim them as good neighbors, and yet they are investing in a regime that has ties to al Qaeda and Hezbollah and the groups that are killing our soldiers in Iraq.”

Doyle’s new group, which he has yet to name, will focus on informing customers about how every auto manufacturer stacks up against American standards, he said. “Are they honoring their workers, trading fairly, reinvesting in our communities, what does that company pay its workers, what kind of benefits to they provide?” he said.

Doyle grew up in in Dearborn, Mich. — home of Ford Motor Company, which employed his parents. “I’m passionate about the auto industry,” said Doyle, a former lawyer at Hogan & Hartson who later served on President Bill Clinton’s 1996 re-election campaign.

Doyle said he plans to christen the organization in the next few weeks and is looking for support from auto manufacturers, suppliers, dealers, employees and retirees. Doyle said he doesn’t yet have a budget target for his group, which will be a 501(c)(4) tax exempt organization.

Doyle added that his effort is not about creating new trade barriers.

“State, local and county governments are giving enormous tax incentives to these companies. Congress could get involved in any number of ways particularly with Toyota’s involvement in Iran,” he said.

Doyle said he is focusing on Toyota because other automakers are “not in town this week promoting their contributions to the American economy. We’ll be looking into other companies’ business practices as well.”

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