Takata Pleads Guilty to Airbag Fraud, Will Pay $1 Billion

CARS.COM — Takata pleaded guilty to fraud in federal court in Michigan today and agreed to pay $1 billion to settle the U.S. Justice Department’s criminal investigation into defective airbag inflators that have led to the largest U.S. auto recall ever.

Related: Is Your Car Part of the Takata Airbag Recall?

The settlement agreement, announced Jan. 13, included a guilty plea to a charge of criminal wire fraud for concealing data from automaker customers showing the inflators can degrade over time from exposure to heat and humidity. The inflators then can deploy with too much force and spew shrapnel into the cabin, a failure linked to 11 U.S. deaths so far.

The bulk of the money will create an $850 million fund to help pay for the inflator recalls and replacements. Another $125 million will create a fund to compensate people physically injured by inflator failures, and Takata will pay a $25 million criminal fine. That’s atop as much as $200 million in civil penalties levied by the National Highway Traffic Safety Administration.

Takata and regulators reportedly have nominated Kenneth Feinberg to manage the victims fund. He is the attorney and compensation expert who ran victim funds for GM’s ignition-switch recall and the BP oil spill. Regulators expect the phased Takata recall by 2020 to affect 64 to 69 million inflators in 42 million cars.

The settlement clears some of the liabilities hampering Takata’s effort to attract a takeover bid and avoid a bankruptcy filing. Three former Takata employees have been indicted individually in Michigan for their alleged roles in the inflator fraud.

Catch up on all of our coverage of the Takata airbag inflator crisis here.