CARS

Takata agrees to $1B plea deal to settle airbag case

Brent Snavely
Detroit Free Press

DETROIT -- Japanese auto supplier Takata, one of the world's largest automotive suppliers, pleaded guilty Monday as a corporation in federal court, agreed to a $1 billion plea deal and told a federal judge its behavior over a 15-year period was "deeply inappropriate."

epa04770644 Erland Zeka removes a Takata brand air bag inflators as he performs the service recall on a 2005 Honda Accord LX at Suburban Honda in Farmington Hills, Michigan USA on 27 May 2015. Under pressure from US transportation regulators, the Japanese manufacturer Takata on 19 May 2015 acknowledged a safety defect in airbags it supplied to 11 automakers and agreed to a recall of nearly 35 million automobiles in the United States. EPA/JEFF KOWALSKY ORG XMIT: DET03

Takata, a 70-year-old supplier of airbags, seatbelts and other safety equipment to nearly every global automaker, made airbags that have been tied to 17 deaths globally. The potentially defective airbags, which can spray shrapnel into the faces of occupants when they activate, are on more than 42 million vehicles worldwide. Its headquarters is in Tokyo but its U.S. headquarter is in Auburn Hills, Mich.

Wearing a blue shirt and a dark gray suit, Yoichiro Nomura, Takata's chief financial officer, expressed the company's "deep regret."

"The conduct leading to today's plea was completely unacceptable," Nomura said. "I would like to sincerely apologize on behalf of Takata. The actions of certain Takata employees to undermine the integrity of the company's testing data and reporting to customers were deeply inappropriate."

U.S. District Judge George Caram Steeh accepted the plea agreement crafted in negotiations between the U.S. Department of Justice and Takata despite several objections filed by attorneys representing victims in civil cases filed separately against Takata.

Steeh said he initially thought the penalties were not steep enough but ultimately accepted them because the company is likely to go bankrupt and be unable to meet steeper fines. Even the current agreement will require Takata to sell or merge with another company to raise the necessary funds to pay victims harmed by the airbags and automakers who are trying to cover the cost of fixing cars with defective airbags.

"All of it could have been avoided," if employees had been honest, Steeh said.

The plea agreement includes a $25 million criminal fine, a $125 million compensation fund to be set up 30 days from today and $850 million to be paid to automakers within five days of a sale or acquisition by another company.

In addition, Takata agreed to allow the judge to approve an independent "special master," to oversee the fund.

Kenneth Feinberg, who oversaw compensation to victims from the Sept. 11, 2001 terrorist attack as well as victims of General Motors' ignition switch recall, is among those under consideration, according to Bloomberg News.

Federal sentencing guidelines would have allowed the judge to impose criminal penalties ranging from $770 million to $1.54 billion. But Steeh said imposing those kinds of fines would only enrich the U.S. Treasury and would further punish victims by draining Takata of its ability to pay them and pay the automakers that its conduct harmed.

"The consequences to those who are at risk of harm to defective airbags that are still in use...are of too much consequence to overlook," Steeh said. "This is an effort, I think, on the part of the government that I think is a valiant effort."