Search
Friday 24 February 2017
  • :
  • :

Takata Pleads Guilty, Executives Charged Criminally

Takata Pleads Guilty, Executives Charged Criminally

If you have a vehicle with a recalled airbag you have been waiting to get installed, this story might give just a bit of solace.

The U.S. government has formally charged Takata with criminal wrongdoing in connection with its exploding airbag inflators linked to at least 16 deaths worldwide. Eleven of those in the United States.

The company faces one felony count of wire fraud. It’s agreed to plead guilty as part of a $1 billion deal with the U.S. Justice Department to end the investigation into how it handled matters. The deal still needs judicial approval.

U.S. Attorney Barbara McQuade from the Eastern District of Michigan announced the settlement and indictments.

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

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

“For more than a decade, Takata repeatedly and systematically falsified critical test data related to the safety of its products, putting profits and production schedules ahead of safety,” said Andrew Weissmann, the Justice Department’s fraud section chief.  “This announcement is the latest in the automotive industry enforcement actions the Fraud Section has taken to protect U.S. consumers against fraud.”

Meanwhile, three former Takata executives face fraud and conspiracy charges after being separately indicted by a federal grand jury. They’re not in custody yet though and presumed to be in Japan. The U.S would like to bring them to the U.S. for trial.

Shinichi Tanaka, 59, Hideo Nakajima, 65, and Tsuneo Chikaraishi, 61 all left the company in 2015. They were indicted on wire fraud and conspiracy charges for allegedly convincing automakers to buy “faulty, inferior, non-performing, non-compliant or dangerous inflators through false reports.”

“Reaching this agreement is a major step towards resolving the airbag inflator issue and a key milestone in the ongoing process to secure investment in Takata,” Takata CEO Shigehisa Takada said in a statement.

He added that the company “deeply regrets the circumstances that have led to this situation and remains fully committed to being part of the solution.”

The six-count indictment says the three Takata executives knew around 2000 that the inflators were not performing to automaker’s specifications and were failing during testing, but they provided false test reports to automakers. The indictment cited a 2004 email from Nakajima to Tanaka that says he was “manipulating” inflator test data.

The inflators can explode with excessive force, sending metal shrapnel flying into vehicle cabins. Many of those killed were involved in low-speed crashes that they otherwise may have survived. To date, 11 deaths and least 184 people have been injured in the United States.

The settlement includes a $25 million criminal fine, $125 million in victim compensation and $850 million to compensate automakers that have suffered losses from massive recalls.

The company has 30 days to pay the $150 million for victim compensation and the criminal fine, but has up to a year to pay the damaged automakers. 

The settlement also calls for an independent monitor of the Japanese auto parts manufacturer. It could help Takata win financial backing from an investor to potentially restructure and pay for massive liabilities from the sweeping recalls.

The airbag recalls triggered the largest automotive safety recall in U.S. history, by far, affecting 19 automakers to date. Regulators expect it will take at least another three years to begin all of the recalls. So far, only 12.5 million inflators have been repaired to date.

In 2015, Takata admitted in a separate $70 million settlement with U.S. auto safety regulators that it was aware of a defect in its airbags, but did not issue a timely recall.

Remember, if you are not sure whether your vehicle has a recalled airbag or not, you can check out our Tataka Recall List.

Photo Copyright: 360b/Shutterstock