Three former employees were reportedly indicted on charges of concealing defects in the air bags.
DETROIT, MI — Takata will pay $1 billion in criminal penalties for the company's "fraudulent conduct" in relation to the alleged sale of defected airbag inflators that the company knew were not performing to specifications required by auto manufacturers as early as 2000, according to the Department of Justice.
In addition to the criminal penalties, an indictment was also unsealed on Friday that charged three former company executives with wire fraud and conspiracy.
Under the agreement, the company will $975 million in restitution and a $25 million fine. A $125 million restitution fund for individuals who have been physically injured by Takata’s airbags will be created along with a $850 million fund for airbag recall and replacement costs incurred by auto manufacturers. Both funds will be overseen by a court-appointed special master.
Takata will also "implement rigorous internal controls, retain a compliance monitor for a term of three years and cooperate fully with the department’s ongoing investigation, including its investigation of individuals," according to a press release from the DOJ.
"Takata has agreed to plead guilty to a one-count criminal information filed today in the Eastern District of Michigan and assigned to U.S. District Judge George Caram Steeh, charging the company with one count of wire fraud," the DOJ said.
According to the company’s admissions, in the late 1990s, Takata began developing airbag inflators that relied upon ammonium nitrate as their primary propellant, the DOJ said. 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 and knew that certain inflators had sustained failures, including ruptures, during testing.
The DOJ said that Takata, nevertheless, induced its customers to purchase these airbag systems by submitting false and fraudulent reports that concealed the true condition of the inflators, making their performance appear better than it actually was. Additionally, the DOJ also said that Takata employees, including some key executives, routinely discussed falsification of test reports and even after inflators began to experience problems that caused injuries and death, the company's executives continued to withhold the accurate data.
In addition, Takata took no disciplinary actions against those involved in the falsification of test data until 2015, despite the fact that senior executives had been made aware of the fraudulent conduct years earlier, the DOJ said.
The three Takata executives – Shinichi Tanaka, 59, Hideo Nakajima, 65, and Tsuneo Chikaraishi, 61, all Japanese citizens – were charged in an indictment filed on Dec. 7, 2016, in the Eastern District of Michigan with one count of conspiracy to commit wire fraud and five counts of wire fraud for their alleged conduct in the fraud scheme.
The air bags led to one of the largest automotive recalls in the U.S. At least 16 people have been killed and more than 180 injured due to the faulty inflators in the air bag that can explode with too much force.
Post a Comment