Takata Will Pay $1 Billion Fine And To Plead Guilty For Airbag Scandal

Jan 14, 2017 06:20 AM EST | Jeroah Sabado

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The Japanese airbag manufacturer Takata Corp. has agreed to plead guilty to its criminal wrongdoing over defective airbags and will pay $1 billion in a settlement with the United States Justice Department. The company is said to conceal a deadly defect in its automotive airbag inflators for many years, at least 16 deaths have been linked to the scheme where 11 of them took place in the U.S.

As part of the settlement, of the $1 billion total fines, $25 million of it will be paid as a fine to the U.S. government and $125 million will be used as compensation fund to the victims who were physically injured by the airbags. The remaining $850-million will be used to compensate affected automakers for massive recall and parts replacing costs.

According to U.S. Attorney Barbara McQuade, three former executives of the manufacturing company were also indicted on wire fraud and conspiracy charges. Shinichi Tanaka, Hideo Nakajima and Tsuneo Chikaraishi, allegedly obscured the deadly effects of the inflator inside Takata's airbags.

The problem with faulty airbags is that the explosion is way too powerful and can possibly launch sharp metal pieces or flying debris toward the passengers, resulting to fatal injury. Prosecutors have now confirmed a Detroit federal grand jury indictment for the three Japanese executives on Friday.

According to the Justice Department, the executives started falsifying and altering reports since 2000. The tests results showed that the airbags could explode or otherwise fail to meet required specifications, and the trio hid this to its supplied automakers for years.

The Justice Department said that the trio worked for both Japan and U.S. operations but were suspended last year and are not working for Takata Corporation as of now. The three will be charged six counts of conspiracy and wire fraud, while Takata was separately charged with one count of wire fraud.

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