Date
20 July 2018
The anticipated Takata settlement caps a government probe stemming from the largest automotive recall in US history. Photo: AP
The anticipated Takata settlement caps a government probe stemming from the largest automotive recall in US history. Photo: AP

Takata expected to pay US$1 bln to settle US air-bag probe

Automotive supplier Takata Corp. is expected as soon as Friday to plead guilty to criminal wrongdoing and pay roughly US$1 billion to resolve a US Justice Department probe of the Japanese company’s handling of rupture-prone air bags, the Wall Street Journal reports.

Takata, which faces significant financial pressures from an onslaught of recalled air bags linked to numerous deaths and injuries, is expected to plead guilty to criminal wire fraud, the report said, citing people familiar with the matter said.

The charge stems from Takata falsifying data in air-bag-testing reports provided to auto makers, they said.

As part of the plea agreement, Takata is expected to pay a US$25 million criminal penalty. Takata also is preparing to pay US$850 million in restitution to auto makers that purchased its air bags and hire an independent monitor to audit the company’s practices under the settlement’s terms, they said.

Another US$125 million will go toward establishing a compensation fund for motorists or their relatives harmed by the company’s air bags. The air bags, which risk exploding and spraying shrapnel in vehicle cabins, are linked to 11 deaths and 184 injuries in the US.

Takata is expected to agree to come up with the US$1 billion in funds within a year, with the stipulation that if within that period the company secures a financial backer to help it restructure, the money should be handed over at that time, the people said.

The negotiations between Takata and federal prosecutors on the settlement, which isn’t ensured, are continuing, and some terms could change.

Federal prosecutors developed a case against Takata in part after finding the supplier provided misleading testing reports to customers including Honda Motor Co., a large buyer of the company’s air bags, the people said. Takata has acknowledged the lapses, while noting that the discrepancies weren’t tied to later air-bag ruptures.

The anticipated Takata settlement would cap a government probe stemming from the largest automotive recall in US history.

The unprecedented safety crisis affecting motorists, regulators and nearly all car companies across the globe had prompted a major campaign aimed at recalling 42 million vehicles with nearly 70 million Takata air bags. The deadly air bags have sparked litigation, congressional hearings and government investigations.

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