Takata to Pay $1 Billion, Plead Guilty in Airbag Fraud Case

Samuel SharpJan 14, 2017

Japanese auto parts maker Takata, a world leader in airbag production, has plead guilty to wrongdoing in connection to the largest automotive recall in USA history.

The government charged Shinichi Tanaka, Hideo Nakajima and Tsuneo Chikaraishi, who all worked at Takata facilities in Japan and the United States.

All three were long-serving executives at Takata until 2015.

The U.S. Justice Department said on Friday that automotive supplier Takata will plead guilty to criminal misconduct after its defective air bags were linked to a number of deaths and injuries.

Under the terms of the agreement with the US Justice Department, which has yet to be approved by a judge, Takata will pay a 25 million fine, establish a 125 million fund to compensate victims and pay 850 million in restitution to affected automakers. Of the $1 billion total, $25 million will be paid as a fine to the US government and $125 million will be used for restitution to people who are physically injured by the air bags.

Regulators have said recalls would eventually affect about 42 million USA vehicles with almost 70 million Takata airbag inflators, making this the largest US safety ever.

There are 46 million recalled Takata inflators in 29 million vehicles in the USA, the National Highway Traffic Safety Administration said.

"We want to send a message of deterrent to auto suppliers who are failing their customers by putting profit ahead of safety", McQuade said.

Some victim advocates are concerned the settlement pays too much to the automakers, and doesn't set aside enough for those injured by the inflators - especially because the number of victims could increase as long as defective products remain unrepaired in cars.

Despite this knowledge, the DOJ alleges that the executives, who all worked for the company in both the USA and Japan, falsified the results and discarded damaging information. All but one of the 11 USA deaths have taken place in Honda Motor Co. vehicles.

Takata, which faces significant financial pressures from an onslaught of recalled air bags linked to numerous deaths and injuries, is expected to plead guilty to criminal wire fraud, the report said, citing people familiar with the matter said.

Just this week Volkswagen agreed to pay $4.3 billion to settle USA criminal charges related to diesel cars that used software created to cheat on emissions tests.

The three conspired to enrich the company and themselves by inducing carmakers to buy air bags with flawed and risky inflators by issuing false reports and other information that hid the true condition, according to the indictment. "This may result in an inflator rupture when the air bag deploys".

The six-count indictment, unsealed on Friday, says Takata executives knew in 2000 that the inflators were not performing to automakers specifications and were failing during testing.

If you own any of these vehicles or any other vehicle that's part of the Takata airbag recall, the National Highway Traffic Safety Administration urges you to not drive these cars unless you "are going straight to a dealer to have them repaired immediately, free of charge". Honda Motor Co. and Takata have settled almost all lawsuits filed in connection with fatal crashes.

This is the reason that Toyota has made another recall that will add a number of 543,000 vehicles for the recall.

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