February 28, 2017

Takata Pleads Guilty to Airbag Scheme

By the C|C Whistleblower Lawyer Team

Tokyo-based Takata Corporation, one of the world’s largest suppliers of automotive safety-related equipment, pleaded guilty to one count of wire fraud and was sentenced to pay a total of $1 billion in criminal penalties stemming from the company’s conduct in relation to sales of defective airbag inflators. Two restitution funds will be established with the payout: a $125 million fund for those physically injured by Takata’s airbags (and who have not already settled with the company); and a $850 million fund for airbag recall and replacement costs by those automakers that were victims of Takata’s fraud scheme. See DOJ Press Release.

According to company admissions, from 2000 through 2015, Takata carried out a scheme to defraud its customers and auto manufacturers by providing false and manipulated airbag inflator test data that made the performance of the company’s airbag inflators appear better than they actually were. Takata executives continued to withhold accurate test information even after the inflators began to experience repeated problems in the field, including ruptures causing injuries and deaths.

In announcing the groundbreaking settlement, a chorus of government enforcers highlighted the gravity of Takata’s transgressions and their commitment to go after companies engaging in similar criminal misconduct. Kenneth A. Blanco, head of the Justice Department’s Criminal Division, stated that “Takata abused the trust of both its customers and the public . . . [and t]oday’s sentence shows that the department will work tirelessly to hold responsible those who engage in this type of criminal conduct.” U.S. Attorney Barbara McQuade of the Eastern District of Michigan added: “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.”

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