Takata to plead guilty, pay $1 billion U.S. penalty over air bag defect
By Paul Lienert and David Shepardson
DETROIT/WASHINGTON (Reuters) - Japan's Takata Corp (7312.T: Quote) on Friday agreed to plead guilty to criminal wrongdoing and to pay $1 billion to resolve a U.S. Justice Department investigation into ruptures of its air bag inflators linked to at least 16 deaths worldwide.
The deal was announced hours after prosecutors in Detroit charged three former senior Takata executives with falsifying test results to conceal the inflator defect, which triggered the world's biggest automotive safety recall.
Takata will pay a $25 million fine, $125 million in a victim compensation fund, including for future incidents, and $850 million to compensate automakers for massive recall costs, the Justice Department said. The auto parts supplier will be required to make significant reforms and be on probation and under the oversight of an independent monitor for three years.
The company's shares rose 16.5 percent in trading in Japan on news of the anticipated settlement, in which it agreed to plead guilty to a single felony count of wire fraud.
The settlement, which must still be approved by a federal judge in Detroit, could help Takata win financial backing from an investor to potentially restructure and pay for massive liabilities from the world's biggest automotive safety recall.
"Reaching this agreement is a major step toward resolving the airbag inflator issue and a key milestone in the ongoing process to secure investment in Takata," Shigehisa Takada, chairman and chief executive of Takata, said in a statement.
He added that the company "deeply regrets the circumstances that have led to this situation and remains fully committed to being part of the solution."
Starting in 2000, Takata submitted false test reports to automakers to induce them to buy faulty air bag inflators, according to the Justice Department. Takata made more than $1 billion on the sale of the inflators and Takata executives fabricated test information about their performance, the department said in a statement. Continued...