Takata will plead guilty, pay $1 bil­lion

San Francisco Chronicle Late Edition - - BUSINESS REPORT - By Tom Krisher, Dee-Ann Durbin and Ed White

DETROIT — Takata Corp. has agreed to plead guilty to a sin­gle crim­i­nal charge and will pay $1 bil­lion in fines and resti­tu­tion for a years-long scheme to con­ceal a deadly de­fect in its au­to­mo­tive air bag in­fla­tors.

The U.S. at­tor­ney’s of­fice in Detroit an­nounced the deal Fri­day, hours af­ter it un­sealed a six­count grand jury in­dict­ment against three for­mer Takata ex­ec­u­tives who are ac­cused of ex­e­cut­ing the scheme by fal­si­fy­ing and al­ter­ing test re­ports that showed the in­fla­tors could rup­ture.

Takata in­fla­tors can ex­plode with too much force, spew­ing shrap­nel into au­to­mo­biles. At least 11 peo­ple have been killed in the U.S. and 16 world­wide be­cause of the de­fect. More than 180 have been in­jured.

Un­der the deal, Takata will pay a $25 mil­lion crim­i­nal fine, $125 mil­lion to in­di­vid­u­als in­jured

by the air bags and $850 mil­lion to au­tomak­ers that pur­chased the in­fla­tors.

A fed­eral judge will be asked to ap­point at­tor­ney Ken­neth Fein­berg to dis­trib­ute resti­tu­tion pay­ments.

Pay­ments to in­di­vid­u­als must be made soon. Money due to au­tomak­ers must be paid within five days of Takata’s an­tic­i­pated sale or merger. Takata is ex­pected to be sold to an­other auto sup­plier or in­vestor this year.

“Au­to­mo­tive sup­pli­ers who sell prod­ucts that are sup­posed to pro­tect con­sumers from in­jury or death must put safety ahead of prof­its,” said Bar­bara McQuade, the U.S. at­tor­ney in Detroit, whose of­fice worked on a two-year in­ves­ti­ga­tion into the com­pany. “If they choose in­stead to en­gage in fraud, we will hold ac­count­able the in­di­vid­u­als and busi­ness en­ti­ties who are re­spon­si­ble.”

The Jus­tice Depart­ment was crit­i­cized for fail­ing to charge any in­di­vid­u­als in ear­lier high-pro­file cases against au­tomak­ers Gen­eral Mo­tors and Toy­ota. Now it’s done so twice in one week. Pros­e­cu­tors dis­closed the in­dict­ment of six Volk­swa­gen ex­ec­u­tives Wed­nes­day when they an­nounced a set­tle­ment of a crim­i­nal probe into the Ger­man car com­pany’s emis­sions-cheat­ing scheme.

On Fri­day, pros­e­cu­tors un­sealed a Detroit fed­eral grand jury in­dict­ment of three for­mer Takata ex­ec­u­tives, Shinichi Tanaka, Hideo Naka­jima and Tsu­neo Chikaraishi. All were sus­pended by the com­pany last year. The Ja­panese com­pany has its U.S. head­quar­ters in the Detroit sub­urb of Auburn Hills.

Ac­cord­ing to an in­dict­ment, as early as 2000 the trio fal­si­fied and al­tered re­ports to hide from au­tomak­ers tests that showed the in­fla­tors could rup­ture or oth­er­wise fail to meet spec­i­fi­ca­tions. They were charged with six counts of con­spir­acy and wire fraud. Takata was charged separately with one count of wire fraud. All three worked in Ja­pan and at Takata’s U.S. op­er­a­tions.

“De­fen­dants com­monly re­ferred to the re­moval or al­ter­ation of un­fa­vor­able test data that was to be pro­vided to Takata cus­tomers as ‘XX-ing’ the data,” the in­dict­ment says, adding that Naka­jima said in a June 2005 email that they had no choice but to ma­nip­u­late test data, and that they needed to “cross the bridge to­gether.”

McQuade said Takata wanted to make a profit on air bags “know­ing that they were cre­at­ing a risk for the end user, soc­cer moms like me who drives around in my Ford Edge with my kids, who at any mo­ment could get in­volved in a fender-ben­der and send a metal pro­jec­tile into my face. The risk that they al­lowed to hap­pen is re­ally rep­re­hen­si­ble.”

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