DETROIT – Federal prosecutors have announced a settlement with Takata Corp., the company responsible for faulty “explosive” airbags that resulted in the deaths of at least 11 people in the United States.
U. S. Attorney Barbara L. McQuade confirmed during a Friday, Jan. 13 press conference that Takata, the Japanese company with U. S. headquarters in Auburn Hills, has agreed to plead guilty to wire fraud and will pay $1 billion in fines and restitution.
According to prosecutors, executives at the company put profits ahead of safety by taking part in a scheme to falsify and alter test reports that showed airbag inflators could rupture for more than a decade.
Three Takata executives have been charged in five counts of wire fraud and one conspiracy count in a scheme to conceal the defect in air bag inflators.
They include Shinichi Tanaka, executive VP of Inflator Global Operations, Hideo Nakajima, director of engineering of automotive systems laboratory and Tsuneo Chikaraishi, chief of Japan, Inflator Global Operations.
The investigation is ongoing, McQuade said, and others could be charged as information becomes available.
“We want to send a message of deterrent to auto suppliers who are failing their customers by putting profit ahead of safety,” McQuade said. “Corporations and employees need to be held accountable. Cheaters will not be allowed to gain a competitive advantage over good corporations who play by the rules. ”
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As part of the settlement, which still must be approved by U. S. District Judge George Caram Steeh, Takata will pay $975 million in restitution and $25 million in fines. It will also be placed on probation for three years.
Most of the restitution, $850 million, is for airbag recall and replacement costs incurred by auto manufacturers who were victims of Takata’s fraud scheme.
Another chunk of the restitution, $125 million, will be used for individuals who have or will be physically injured by the airbags.
The airbags in question were installed on both the driver-and passenger-sides of vehicles. The explosive airbags would send shrapnel flying through the cabin of the vehicles when deployed.
Nineteen automakers, 22 brands and more than 42 million vehicles worldwide were affected. Almost 70 million air bag inflators are or will be under recall by 2019, in what some regulators have called the largest and most complex auto safety recall in U. S. history.
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According to the company’s admissions, in the late 1990s, Takata began developing airbag inflators that relied upon ammonium nitrate as their primary propellant.
From at least in or around 2000, Takata knew that certain ammonium nitrate-based inflators were not performing to the specifications required by the auto manufacturers.
Takata also knew that certain inflators had sustained failures, including ruptures, during testing. Nevertheless, Takata induced its customers to purchase these airbag systems by submitting false and fraudulent reports and other information that concealed the true condition of the inflators.
According to prosecutor, key executives “routinely and systematically” discussed the falsification of test reports in email and in verbal communications.
Even after the inflators began to experience repeated problems in the field – including ruptures causing injuries and deaths – Takata executives continued to withhold the true and accurate inflator test information and data from their customers.
All three executives were suspended in 2015 and are now in Japan. U. S. authorities will work with Japanese authorities to extradite those charged for trial.
McQuade declined to put a percentage on the chances of getting them back to the U. S., but said the chances are “pretty good. “
