Takata Agrees to Guilty Plea, Will Pay $1B for Hiding Defect

Japan’s Takata Corp on Friday consented to plead guilty to criminal wrongdoing and to pay $1 billion to determine a U.S. Equity Department examination concerning ruptures of its air bag inflators was connected to no less than 16 deaths around the world, and 180 injuries.

The deal was reported hours after prosecutors in Detroit charged three previous senior Takata executives with falsifying test results to hide the inflator defect, which set off the world’s greatest car safety review.

Under the request deal, Takata will pay a $25 million US criminal fine, $125 million US to people harmed by the air bags and $850 million US to automakers that obtained the inflators.

Payments to individuals must be made soon. Money due to automakers must be paid within five days of Takata’s anticipated sale or merger. Takata is expected to be sold to another auto supplier or investor sometime this year.

As of 2015, Takata was the second-largest supplier of air bags in the world, accounting for 20 per cent of the air bags sold.

The government said Takata had minimal internal controls and failed to notice its executives’ misconduct for years. It alleged that Takata falsified test data to deceive automakers that used its inflators in their vehicles. Once senior Takata executives learnt that employees had falsified air bag reports, in 2009, they failed to take disciplinary action against those employees until 2015.

“Cheaters will not be allowed to gain an advantage over the good corporate citizens who play by the rules,” McQuade said.

All three executives who were charged are now in Japan and were suspended by Takata last year.

McQuade said her office will work with Japanese authorities and do everything in its power to extradite them to the U.S. to face trial.