Takata pleads guilty in air bag scan­dal, agrees to $1B penalty

Sun Sentinel Broward Edition - - MARKETS - By Tom Krisher and Ed White

DETROIT — Ja­panese auto parts maker Takata Corp. pleaded guilty to fraud Mon­day and agreed to pay a $1 bil­lion penalty for con­ceal­ing a deadly de­fect in mil­lions of its air bags.

Takata ad­mit­ted hid­ing ev­i­dence that its air bag in­fla­tors can ex­plode with too much force, hurl­ing shrap­nel into driv­ers and pas­sen­gers.

The in­fla­tors are blamed for at least 16 deaths world­wide— 11 of them in the U.S. — and more than 180 in­juries. The prob­lem touched off the big­gest re­call in U.S. au­to­mo­tive his­tory, in­volv­ing 42 mil­lion ve­hi­cles and up to 69 mil­lion in­fla­tors. The com­pany’s chief fi­nan­cial of­fi­cer, Yoichiro-No­mura, en­tered the guilty plea on Takata’s be­half in fed­eral court in Detroit. He also agreed that Takata will be sold or merge with an­other com­pany.

The penal­ties in­clude $850 mil­lion in resti­tu­tion to au­tomak­ers, $125 mil­lion for vic­tims and fam­i­lies and a $25 mil­lion crim­i­nal fine.

Takata’s in­fla­tors use am­mo­nium ni­trate to cre­ate a small ex­plo­sion that in­flates air bags. But when ex­posed to pro­longed high tem­per­a­tures and hu­mid­ity, the chem­i­cal can de­te­ri­o­rate and burn too fast. That can blow apart a metal can­is­ter.

In the U.S., 19 au­tomak­ers are re­call­ing the in­fla­tors. World­wide, more than 100 mil­lion in­fla­tors are be­ing re­called.

Karl Brauer, ex­ec­u­tive pub­lisher of Kel­ley Blue Book, said au­thor­i­ties may have kept the penalty man­age­able so Takata could stay in busi­ness and con­tinue to carry out the gi­ant re­call.

“Sim­ply be­cause de­stroy­ing them makes the prob­lem much­worse,” he said.


Takata agreed to pay a $1 bil­lion penalty.

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