Takata Pleads Guilty Over Defective Airbag Charges

Feb 28, 2017 09:20 AM EST | Yen Palec

Controversial Japanese company Takata have pleaded guilty to fraud charges filed in the United States Justice Department. Apparently, this admission is part of the expected $1 billion deal which covers compensation funds for victims of the company's faulty airbags. The fund will also compensate automakers who were affected by the massive recall.

Representatives of U.S. vehicle owners have filed suit against Nissan, Honda, Ford, BMW, Mazda, and other auto manufacturers over allegations that the companies are aware of defective Takata airbags yet they kept on using them. These faulty airbags were pointed as the culprits to at least 16 deaths.

U.S. prosecutors have charged three senior Takata executive in Japan. The executives were charged for falsifying test results in order to conceal the defects that were linked to the massive recall of more than 100 million airbag inflators, according to Reuters.

Investigations into the matter concluded that Takata airbag inflators can explode and shoot out metal debris inside the car's cabin, increasing the potential for injuries and even death to the driver and passengers. The defect has led at least 10 automakers to recall more than 31 million cars since 2008. The recall is considered as the biggest to be ever issued in history.

As part of the recently closed deal with the U.S. Justice Department, Takata created two independently administered restitution funds in January. One fund received $850 million and will be used to compensate automakers that were affected by the recall. The second fund received $125 and will be used to compensate for individuals who were physically injured by Takata's faulty airbags.

According to CNBC, both funds are expected to be administered by compensation expert Kenneth Feinberg, the same lawyer who head similar funds for General Motors and for victims of the 9/11 attack. Takata has yet to comment when these compensations will roll out.

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