Economy

Takata to cut $1bn plea deal in U.S. over exploding air bags

Takata to cut $1bn plea deal in U.S. over exploding air bags

Regulators have said recalls would eventually affect about 42 million US vehicles with almost 70 million Takata air bag inflators, making this the largest safety recall in USA history.

Shinichi Tanaka, Hideo Nakajima and Tsuneo Chikaraishi, all of Japan, were indicted on charges related to deceiving automobile companies about known defects to continue selling products they knew failed safety tests.

Toyota Motor Corp. said Friday it is recalling another 543,000 vehicles in the United States for defective front passenger air bag inflators made by Japan's Takata Corp. In this settlement of $1 billion, $125 million will go towards victim compensation, $25 million will be for the criminal fine and the remaining $850 million will compensate those automakers who have suffered huge losses from massive recalls.

The fine is broken down as a $25 million criminal fine, $125 million for victim compensation, and $850 million for compensating automakers, as announced Friday by the U.S. Attorney's Office for the Eastern District of MI.

The company has acknowledged some of its airbag inflators exploded with too much force and sprayed metal shrapnel into cars.

On Friday, the Justice Department is expected to announce that Takata will plead guilty to criminal misconduct, according to people familiar with the matter.

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Three Takata executives have been charged in six counts of conspiracy, wire fraud in scheme to hide defect in air bag inflators.

In November 2015, the US National Highway Traffic Safety Administration imposed a record $200 million civil fine against Takata for providing inadequate and inaccurate information to regulators about the defect. All but one of the 11 US deaths have taken place in Honda Motor Co. vehicles.

A Reuters source confirmed a Wall Street Journal report that Takata is expected to agree to come up with the $1 billion within a year or when it secures a financial backer.

U.S. Attorney Barbara McQuade from the Eastern District of MI announced the settlement and indictments on Friday in Detroit. "This may result in an inflator rupture when the air bag deploys".

Takata has agreed to recall all original equipment inflators that lack a chemical drying agent in phases by the end of 2018. Honda Motor Co. and Takata have settled almost all lawsuits filed in connection with fatal crashes. This is due to the ammonium nitrate used in the Takata airbag inflators that have the tendency to explode with extended exposure to moisture and heat.


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