By on January 13, 2017

Takata

Automotive parts supplier Takata Corp, along with three of its former employees, were charged by federal prosecutors with concealing the deadly defect of its airbag inflators.

The devices have been subject to an unprecedentedly massive recall and have have been linked to at least 11 fatalities in the United States. Takata has agreed to plead guilty to the charges against it and will pay $1 billion in restitution. 

Of the billion dollar penalty, $850 million is set aside for automakers that purchased the inflators, while $125 million will go toward the individuals injured by the defective products. The remaining money will serve as a general criminal fine.

The federal grand jury also indicted former Takata employees. Filed in early December and unsealed today, the indictment alleges the three workers falsified and doctored reports to mask test results that would have shown that the inflators were dangerously faulty. The three men — Shinichi Tanaka, Hideo Nakajima and Tsuneo Chikaraishi — have been charged with six counts of conspiracy to commit wire fraud, and wire fraud.

“Automotive suppliers who sell products that are supposed to protect consumers from injury or death must put safety ahead of profits,” U.S. Attorney Barbara L. McQuade said in an official statement to the press. “If they choose instead to engage in fraud, we will hold accountable the individuals and business entities who are responsible.”

Takata’s airbags differ from others in that the inflators use an ammonium nitrate propellant to quickly fill the crash bags. However, the chemical can become unstable over time, expand too quickly, and blow apart the metal canister. Prosecutors said that the company was aware that its inflators were not performing to industry specifications as early as 2000, but sold them to automakers anyway. The parts supplier even encouraged customers to purchase systems by submitting fraudulent reports that concealed the failures and ruptures during testing, prosecutors said.

The U.S. has ordered Takata to recall all of its faulty air bags by the end of 2019. The matter is being conducted in a way that prioritizes higher-risk cars sold in states with elevated temperatures and humidity. Roughly 46 million airbags in over 29 million vehicles have been recalled since December 2016. Another 25 million additional units are set to be recalled over the next two years.

As for the criminal fine, payments to the individual victims will begin immediately. Money allocated to automakers must be paid within five days of Takata’s anticipated sale or merger — one of which is anticipated to occur within the year.

The company has also been fined $70 million by U.S. safety regulators for its slow handling of the recall. There could also be an additional $130 million fine leveled from the National Highway Traffic Safety Administration, but only if Takata can’t fulfill the terms of a consent order agreed to in November of 2015.

Considering the overwhelming costs involved with the recall and legal expenses, financial analysts fully expect Takata’s U.S. operations — located in the Auburn Hills, Michigan — to seek bankruptcy protection.

[Image: Takata]

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13 Comments on “Takata to Plead Guilty, Will Issue $1 Billion in Restitution for Deadly Airbags...”


  • avatar
    APaGttH

    Who would have thought that foreign owned car parts/makers would be so quick to settle with the outgoing democratic administration versus face the “business friendly” incoming republican administration.

    • 0 avatar
      VoGo

      Sigh. The agreement reflects the fact that Takata is essentially bankrupt and the industry and regulators have recognized that the best thing for everyone, including consumers, is to prioritize replacement of all these airbags over getting the largest possible settlement, which would only imperil consumers.

      Nothing political about this settlement, except the commentary that surrounds it.

      • 0 avatar
        DaveNH

        Considering that my Fiance’s 07 Ridgeline has been under recall for what, 2 years, and we’re still waiting on a replacement airbag, I’m not sure where the priorities are.

        • 0 avatar
          jalop1991

          You know, don’t you, that you can request that Honda put you in a loaner/rental while the Ridgeline is waiting for its parts.

          Free of charge. 100%. No strings attached.

          Did it this summer. I had 6 weeks of loaner while my ILX sat in the garage.

          I have to wonder if the loaner status didn’t put me toward the top of the list…

        • 0 avatar
          JohnTaurus_3.0_AX4N

          Dave, does the NH in your screen name refer to New Hampshire?

          If so, move to the humid and hot dirty South and you’ll move up the list quicly. It’ll also increase the chance that you or her or both of you will add to the death/injured toll.

      • 0 avatar
        JohnTaurus_3.0_AX4N

        I’ll be damned, VoGo, I agree with you 100%. Could a Corolla S automatic purchase be far behind?

        (That car/joke is a dig at myself, nothing to do with you, other than it would be far from my known typical choice.)

        I was hoping against all hope that the B&B’S comments here wouldn’t use this story as an excuse for more Trump bashing. I spent most of my time in the Titan thread and intentionally avoided any article I thought might lead to more politic wars, until curiosity got me and I wanted to read this story. I can’t bring myself to open the Obama CAFE one.

        I was disappointed, with my suspicions confirmed, by the very first comment.

        I don’t like Trump.
        I don’t hate Trump.
        I can’t say I’m sorry he won given how I feel about the H bomb.
        I intend to give him a chance before I make up my mind about him being a decent President, but all of that is unimportant here.

        I know I’m guilty of political grandstanding as are many others, ah-hem, but for the love of RPMs, can’t we all just get along (kinda sorta) and talk CARS? That is why I come here. Isn’t that why y’all are really here, too?

        We can still bicker, it’ll just be more constructive while being less intense and personal when its about how super/wonderful/awesome or lackluster/awful/terrible the CUV being discussed is, or why we don’t get _____ car here when we probably wouldn’t remotely consider it if it was offered.

        I admit I’m also guilty of being provokable, particularly on this subject, as are most of us when we read things that frustrate or offend us.

        I regret it when my judgement is impaired by anger or being offended. I’m not exactly proud of all I say on the subject by any means, even though it is exactly how I truly feel at the time. That didn’t make it right or acceptable. I hereby apologize to any and everyone (including you) I may have offended and/or been rude to in doing so.

        If there is hope for TTAC’s current political hurricanado to dissapate, it’s right here where you and I, bitter political adversaries in the past, find commom ground on an actual subject related to politics.

        Here’s to ya, my friend.

  • avatar
    SCE to AUX

    It’s a shame they can’t actually pay this amount.

    Who is actually bearing the cost of the replacement parts and labor?

    Is Takata selling anything new, or is all their energy going into recall work?

    • 0 avatar
      JohnTaurus_3.0_AX4N

      Last I heard, they’re still selling faulty airbags to Toyota and othes, so I’d guess that yes, at this time, they’re still operating the business side.

  • avatar
    Tosh

    Psst! Y’all ole-timers remember when Takata’s troubles were merely about how finger-lickin’ chicken-fudging merkins were pouring Mt Dew into their high-definition seatbelt buckles?

  • avatar
    Elliot86

    Why is the Takata logo the state of Utah?

  • avatar
    DudeMcLovin

    I wish I had more details on the execs who made out like bandits at Takata before bailing with their golden parachute. I’m sure there were more than three people involved in this cover up.

    I would also like to know if these three employees (who I’m guessing reside in Japan) will be extradited to face justice. My guess is no but that’s just me being cynical after witnessing years of corporate malfeasance without ever being held accountable for screwing over countless consumers.

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