Airbag Manufacturer Takata Pleads Guilty: Fined $1 Billion

Jan 16, 2017 04:31 PM EST | JP Olvido

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Japanese automotive supplier Takata has pleaded guilty to fraud. Criminal charges that the company will be paying amount to US$1 billion.

Takata and faulty airbags. Three executives of Takata were charged five counts of wire fraud and one count of conspiracy to commit wire fraud. The executives had central roles in the company's airbag scandal which has caused injury and deaths to motorists worldwide.

The executives charged were Shinichi Tanaka, 59 years old, Hideo Nakajima, 65 years old, and Tsuneo Chikaraishi, 61 years old. The three executives, who were long-time employees and had decades of experience in the automotive industry, had discussed the fabrication, removal, and manipulation of test information and data of its airbag inflators. Takata had known since the mid-2000s that its ammonium-nitrate based airbags not safe at all and had done nothing to rectify them.

"Automotive suppliers who sell products that are supposed to protect consumers from injury or death must put safety ahead of profits... If they choose instead to engage in fraud, we will hold accountable the individuals business entities who are responsible," said Barbara McQuade, a US attorney of Michigan's Eastern District, in an announcement. McQuade further added that she will seek extradition for the three executives who are in Japan.

The Takata airbag scandal is linked to 17 known deaths and more than 100 sustained injuries across the world. The scandal has triggered a recall that could well affect over 100 vehicle types from 13 car manufacturers.

There have been claims that the company is in talks on a restructuring to deal with costs of the recall. The Japanese company may need to seek US bankruptcy protection to clear the way for a possible takeover. The US$1 billion Takata needs to pay includes a $25 million fine paid to the United States government, US$125 million to injured motorists who have not yet settled with the company, and US$850 million to affected car manufacturers for recall costs.

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