Scandal-plagued airbag manufacturer Takata has agreed to plead guilty to wire fraud and pay $1 billion in criminal penalties for selling defective inflators that killed 11 people in the U.S. and injured more than 180 others nationwide, the Justice Department announced today.
According to the DOJ, Takata -- which supplies airbag parts to Honda, Toyota and other auto manufacturers –- falsified reports to conceal failures during testing, including repeated ruptures of ammonium nitrate inflators, which can spew shrapnel into the cab of a vehicle. Even after the ruptures began to cause injury and deaths on the roadways, the DOJ said company executives continued to withhold accurate testing data.
"Takata was supposed to be selling products that saved lives, not pushing into the marketplace products that increased the risk of harm to consumers," said Sandra Moser, of the Justice Department Criminal Division’s Fraud Section. "Time and again, it put profit and production schedules ahead of people's safety."
Takata will have to pay $150 million -- $125 million in victim compensation and another $25 million in criminal fines -– in the next 30 days. The remainder -- $850 million –- will be distributed over time to the automakers forced to replace the faulty inflators.
"If it’s true, shame on them," said Corey Burdick, who lost his eye after the driver’s side airbag in his Honda Accord ruptured, sending a 3-inch long jagged piece of metal into his face. "They killed a lot of people and they hurt a lot of people."
Some victim advocates are concerned the settlement pays too much to the automakers, and doesn’t set aside enough for those injured by the inflators – especially because the number of victims could increase as long as defective products remain unrepaired in cars.
More than 60 million inflators in 42 million vehicles either have been or will be recalled, but due to a scarcity of replacement parts, just 12.5 million have been repaired to date, according to the National Highway Traffic Safety Administration.
Three of the company’s top executives -- Shinichi Tanaka, Hideo Nakajima and Tsuneo Chikaraishi – were indicted for their role in the scandal.
Today’s announcement comes on the heels of another major auto industry settlement: On Wednesday, the Justice Department announced Volkswagen will pay $4.3 billion and plead guilty in its diesel emissions scandal. The company has admitted they installed "defeat devices" designed to cheat U.S. emissions tests in about half a million cars nationwide.