Tokyo-based Takata Corporation pleaded guilty Monday to one count of wire fraud and was sentenced to pay $1 billion in criminal penalties for lying about defective airbag inflators.
Takata appeared before U.S. District Judge George Caram Steeh in the Eastern District of Michigan.
Judge Steeh sentenced Takata to pay a total criminal penalty of $1 billion, including $975 million in restitution and a $25 million fine, and three years’ probation.
Under the plea deal, the DOJ required a $125 million fund for people physically injured by Takata’s airbags and who haven’t already reached a settlement with the company.
There will also be a $850 million fund for airbag recall and replacement costs incurred by car makers who were victims of Takata’s fraud.
A court-appointed special master will oversee payouts from the restitution funds.
Takata agreed to retain an independent compliance monitor for three years and cooperate with the DOJ’s ongoing investigation, including its investigation of individuals.
Takata is one of the world’s biggest suppliers of automotive safety-related equipment.
The DOJ’s Kenneth Blanco said, “For over a decade, Takata lied to its customers about the safety and reliability of its ammonium nitrate-based airbag inflators.”
The defect is linked to at least 11 deaths and more than 100 injuries in the United States. Worldwide Takata’s airbags have killed at least 16 people and injured 180.
From 2000 through 2015, Takata defrauded customers and auto makers by providing “false and manipulated airbag inflator test data,” the DOJ said. The false data made the performance of the company’s airbag inflators appear better than it actually was.
Even after repeated problems with the inflators in the field — including ruptures causing injuries and deaths — Takata executives withheld accurate inflator test data from customers, according to the DOJ.
“We hope that today’s guilty plea and sentence will send a message to suppliers of consumer safety products that they must put safety ahead of profits,” U.S. Attorney Barbara McQuade said.
Takata executives learned about the defects in 2000.
In 2013, Toyota, Honda, Nissan, Mazda, and General Motors recalled about 3.4 million older-model vehicles worldwide because of defective Takata airbags.
By May 2016, the U.S. government had recalled 68 million Takata airbag inflators.
The National Highway Traffic Safety Administration fined Takata up to $200 million in November 2015 and required the company to institute a massive recall.
Richard L. Cassin is the publisher and editor of the FCPA Blog.