Takata to Plead Guilty, Will Issue $1 Billion in Restitution for Deadly Airbags

Matt Posky
by Matt Posky
takata to plead guilty will issue 1 billion in restitution for deadly airbags

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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4 of 13 comments
  • Elliot86 Elliot86 on Jan 13, 2017

    Why is the Takata logo the state of Utah?

  • DudeMcLovin DudeMcLovin on Jan 13, 2017

    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.

  • Dusterdude @El scotto , I'm aware of the history, I have been in the "working world" for close to 40 years with many of them being in automotive. We have to look at situation in the "big picture". Did UAW make concessions in past ? - yes. Do they deserve an increase now ? -yes . Is their pay increase reasonable given their current compensation package ? Not at all ! By the way - are the automotive CEO's overpaid - definitely! (That is the case in many industries, and a separate topic). As the auto industry slowly but surely moves to EV's , the "big 3" will need to be producing top quality competitive vehicles or they will not survive.
  • Art_Vandelay “We skipped it because we didn’t think anyone would want to steal these things”-Hyundai
  • El scotto Huge lumbering SUV? Check. Unknown name soon to be made popular by Tiktok ilk? Check. Scads of these showing up in school drop-off lines? Check. The only real over/under is if these will have as much cachet as Land Rovers themselves? A bespoken item had to be new at one time. Bonus "accepted by the right kind of people" points if EBFlex or Tassos disapproves.
  • El scotto No, "brothers and sisters" are the core strength of the union. So you'll take less money and less benefits because "my company really needs helped out"? The UAW already did that with two-tier employees and concessions on their last contract.The Big 3 have never, ever locked out the UAW. The Big 3 have agreed to every collective bargaining agreement since WWII. Neither side will change.
  • El scotto Never mind that that F-1 is a bigger circus than EBFlex and Tassos shopping together for their new BDSM outfits and personal lubricants. Also, the F1 rumor mill churns more than EBFlex's mind choosing a new Sharpie to make his next "Free Candy" sign for his white Ram work van. GM will spend a year or two learning how things work in F1. By the third or fourth year GM will have a competitive "F-1 LS" engine. After they win a race or two Ferrari will protest to highest F-1 authorities. Something not mentioned: Will GM get tens of millions of dollars from F-1? Ferrari gets 30 million a year as a participation trophy.