Takata Settles Federal Probe for $1 Billion
CARS.COM — The Justice Department announced today it will settle a criminal investigation with Takata Corp. for $1 billion over the Japanese auto supplier’s defective airbag inflators, which have thus far been linked to 11 U.S. deaths and tens of millions of recalled cars.
Related: Is Your Car Part of the Takata Airbag Recall?
Takata will plead guilty to charges of wire fraud and cooperate with investigators, pay a criminal fine of $25 million and make $975 million in restitution payments — $850 million to automakers who bought its faulty inflators and $125 million to affected individuals who haven’t otherwise reached a settlement with the company. Reuters first broke the news yesterday, citing unnamed sources that confirmed as much.
Separately, a federal grand jury released documents indicting three longtime Takata executives with five counts of wire fraud and one count of conspiracy to commit wire fraud. The executives — Shinichi Tanaka, Hideo Nakajima and Tsuneo Chikaraishi — were involved in the design, production and testing of the inflators.
The Michigan-based jury charged the three, who each left Takata in 2015, with “inducing the victim [original equipment manufacturers, largely automakers] to purchase airbag systems from Takata that contained faulty, inferior, nonperforming, noncompliant, or dangerous inflators by deceiving the OEMs through false and fraudulent reports and other information that concealed the true condition of the inflators, which the OEMs would not have otherwise purchased.” All three executives knew the inflators had failed during testing as long ago as 2000, court documents allege.
The court went on to cite specific emails between the three executives — and sometimes with other Takata employees — to alter unfavorable test data for various automakers. Even after inflator ruptures began in 2008, all three executives, among other Takata officials, continued to withhold test data from automakers. Those automakers, in turn, paid Takata more than $1 billion for tens of millions of faulty inflators, according to the court.
Fines Compared
Today’s settlement is on the scale of criminal settlements in recent years with Toyota, which paid $1.2 billion in 2014 over its sudden-acceleration recalls, and GM, which paid $900 million in 2015 for its ignition-switch recalls. Volkswagen Group’s settlement Wednesday dwarfs the group, however: It will pay $4.3 billion to resolve civil penalties and a criminal investigation for its ongoing diesel scandal.
“Today’s criminal charges of the Takata Corp. and three of its employees should be a reminder to other corporations and their employees that if they commit fraud, the FBI and its law enforcement partners will ensure they are held accountable for their actions,” FBI special agent David Gelios said in a statement today. “Whether it is the manipulation of test results which impact customer safety, defective product development or any other type of fraud, we will continue to aggressively investigate corporate fraud allegations to protect consumers in the United States and elsewhere.”
Takata’s faulty airbag inflators can deploy with too much force and send metal shrapnel into the cabin. Automakers have recalled more than 46 million inflators in 29 million cars, and regulators expect the total to reach 64 million to 69 million inflators in 42 million vehicles by 2020. Court documents showed that Takata has sold the inflators, which employ ammonium nitrate as their propellant, since the late 1990s. From around 2000 to 2015, the supplier built and sold enough inflators for “hundreds of millions of driver- and passenger-side airbag systems,” the documents say.
