Japan's Takata Corp agreed to plead guilty to criminal wrongdoing and 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. Rough Cut (no reporter narration).
ROUGH CUT (NO REPORTER NARRATION) STORY: Japan's Takata Corp on Friday (January 13) agreed to plead guilty to criminal wrongdoing and 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. 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 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 settlement, in which it agreed to plead guilty to a single felony count of wire fraud. The settlement 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. 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. A federal grand jury separately indicted three Takata executives over the defective air bag inflators after a more than two-year U.S. criminal investigation. It was not clear if they were still working for the company. Three longtime Takata executives Shinichi Tanaka, Hideo Nakajima and Tsuneo Chikaraishi were indicted on wire fraud and conspiracy charges for allegedly convincing automakers while at the auto supplier to buy "faulty, inferior, non-performing, non-compliant or dangerous inflators" through false reports." The six-count indictment, unsealed on Friday, said the trio of Takata executives knew around 2000 that the inflators were not performing to automakers specifications and were failing during testing, but they provided false test reports to automakers. The indictment cited a 2004 email from Nakajima to Tanaka that says he was "manipulating" inflator test data. The inflators can explode with excessive force, launching metal shrapnel at passengers in cars and trucks. Many of those killed were involved in low-speed crashes that they otherwise may have survived. To date, 11 deaths and 184 injuries have been linked to the inflators in the United States.