Firm to pay $1b penalty over faulty air bags

Japan’s Takata Corp has agreed to plead guilty to criminal wrongdoing into ruptures of its air bag inflators linked to at least 16 deaths worldwide.
Shigehisa Takada, the Chairman and Chief Executive of Takata, said in a statement late on Friday in Washington, United States of America that the agreement with the Justice Department was a major step forward.
Takata said: “Reaching this agreement is a major step toward resolving the airbag inflator issue and a key milestone in the ongoing process to secure investment in Takata.
“The company deeply regrets the circumstances that have led to this situation and remains fully committed to being part of the solution.”
The deal was announced hours after prosecutors in Detroit charged three former senior Takata executives with falsifying test results to conceal the inflator defect, which triggered the world’s biggest automotive safety recall.
Takata will pay a $25 million fine, $125 million in a victim compensation fund, including for future incidents, and $850 million to compensate automakers for massive recall costs, according to the Justice Department.
The auto parts supplier will be required to make significant reforms and be on probation and under the oversight of an independent monitor for three years.
However, the company’s shares rose 16.5 per cent in trading in Japan on news of the anticipated settlement, in which it agreed to plead guilty to a single felony count of wire fraud.
The settlement, which must still be approved by a federal judge in Detroit, could help Takata win financial backing from an investor to pay for massive liabilities from the world’s biggest automotive safety recall.
In 2015, Takata admitted in a separate $70 million settlement with U.S. auto safety regulators that it was aware of a defect in its air bag inflators but did not issue a timely recall.
The recalls have affected 19 automakers to date, and regulators said recalls would eventually affect about 42 million vehicles in US only.