Takata to pay $1B for hiding air bag defect

Company agrees to plead guilty to single criminal charge.

The deadly defects in automotive air bag inflators have been blamed for at least 16 deaths worldwide.

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 plea deal on Friday, the same day it unsealed a six-count 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 by the inflators in the U.S. and 16 worldwide. More than 180 have been injured.

Under the plea 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 U.S. District Court judge in Detroit has appointed 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 sometime 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.”

Takata, based in Japan, has its U.S. headquarters in the Detroit suburb of Auburn Hills, Michigan.

As of 2015, Takata was the second-largest supplier of air bags in the world, accounting for 20 percent of the air bags sold.

The government said Takata had minimal internal controls and failed to notice its executives’ misconduct for years. It alleged that Takata falsified test data to deceive automakers that used its inflators in their vehicles. Once senior Takata executives did learn that employees had falsified air bag reports, in 2009, they failed to take disciplinary action against those employees until 2015.

“Cheaters will not be allowed to gain an advantage over the good corporate citizens who play by the rules,” McQuade said.

All three executives who were charged are now in Japan and were suspended by Takata last year.