$1 Billion Apology: Takata Pleads Guilty as CFO Explains Its 'Deeply Inappropriate' Behavior
It’s been a long road to this point, but Takata’s CFO, Yoichiro Nomura, finally had the opportunity to plead guilty on behalf of the company to fraud. The company accepted a $1 billion settlement with the U.S. government yesterday as Nomura condemned Takata’s actions as “deeply inappropriate.”
U.S. District Court Judge George Steeh confirmed the previously agreed-to settlement against objections from lawyers for victims of Takata airbag inflator explosions, who claimed the criminal settlement mistakenly identified automakers as victims of Takata’s unlawful behavior.
“The conduct leading to today’s plea was completely unacceptable,” Nomura said inside the Detroit courtroom. “I would like to sincerely apologize on behalf of Takata. The actions of certain Takata employees to undermine the integrity of the company’s testing data and reporting to customers were deeply inappropriate.”
Nomura confessed the company had been aware of potential problems with its airbags’ explosive ammonium nitrate propellant in 2000, and had manipulated the test data provided to automakers. Those faulty airbag inflators ended up installed in millions of vehicles, causing unnecessary injuries and death.
“All of it could have been avoided,” if employees had been honest, Judge Steeh said.
The massive global recall has financially crippled Takata, and it claims that it will need to use the proceeds from its sale to fulfill the terms of the settlement. “Destruction of the corporation would probably have been a fair outcome in this case,” Steeh said, before mentioning his involvement in another case where Takata had admitted to price fixing.
However, Steeh explained that he intentionally avoided the imposition of a stiffer sentence or larger fines. The settlement he approved was set at $1 billion because Takata would otherwise have likely slipped into bankruptcy, stalling efforts to recall millions of the deadly airbag inflators still installed in vehicles.
The plea agreement was developed in negotiations between the U.S. Department of Justice and Takata prior to Steeh’s approval. It includes a $25 million criminal fine, a $125 million compensation fund to be set up a month from now, and $850 million to be paid to automakers within five days of a sale or acquisition by another company.
[Source: Reuters]
A staunch consumer advocate tracking industry trends and regulation. Before joining TTAC, Matt spent a decade working for marketing and research firms based in NYC. Clients included several of the world’s largest automakers, global tire brands, and aftermarket part suppliers. Dissatisfied with the corporate world and resentful of having to wear suits everyday, he pivoted to writing about cars. Since then, that man has become an ardent supporter of the right-to-repair movement, been interviewed on the auto industry by national radio broadcasts, driven more rental cars than anyone ever should, participated in amateur rallying events, and received the requisite minimum training as sanctioned by the SCCA. Handy with a wrench, Matt grew up surrounded by Detroit auto workers and managed to get a pizza delivery job before he was legally eligible. He later found himself driving box trucks through Manhattan, guaranteeing future sympathy for actual truckers. He continues to conduct research pertaining to the automotive sector as an independent contractor and has since moved back to his native Michigan, closer to where the cars are born. A contrarian, Matt claims to prefer understeer — stating that front and all-wheel drive vehicles cater best to his driving style.
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Lawyers make $, consumers stuck with cars they are not supposed to even drive are left screwed.
In my mind I'm replaying the scene near the end of Hacksaw Ridge, where the Japanese commander on Okinawa commits seppuku, with the assistance of his subordinates.