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Takata Pleads Guilty to US Fraud Charge Linked to Faulty Air Bags

FILE - The logo of Takata Corp. is displayed at an auto supply shop in Tokyo.
FILE - The logo of Takata Corp. is displayed at an auto supply shop in Tokyo.

Japan's Takata Corp. on Monday pleaded guilty to a felony charge as part of an expected $1 billion deal with the U.S. Justice Department that includes compensation funds for automakers and victims of its faulty airbag inflators.

After Takata's guilty plea, a federal judge in Detroit was hearing objections on Monday to the settlement raised by lawyers for some victims of Takata inflator ruptures, who argue the settlement will be used by automakers to avoid liability, a court clerk said.

Takata hopes to wins court approval of the settlement, a key hurdle to securing the backing of an investor or acquirer that can fund a turnaround effort and help it grapple with billions of dollars in costs related to the auto industry's biggest-ever recall.

16 deaths linked to defective air bags

Lawyers for U.S. vehicle owners have sued Honda, Nissan, BMW AG, Ford, Mazda, and other automakers, alleging they knew about the defective Takata air bags for years but kept using them.

At least 16 deaths have been linked to exploding Takata airbag inflators. The defects have led 10 automakers to recall more than 31 million cars worldwide since 2008. All but one of the deaths have occurred in Honda vehicles.

Kevin Dean, a South Carolina lawyer for some Takata victims suing automakers, said in a court filing on Monday that the plea agreement is “wrought with inaccurate, incomplete and misleading assertions of fact” that could help automakers avoid liability.

Three Takata executives charged

Takata last month had agreed to plead guilty to a single count of wire fraud related to receiving payment for the faulty deflators across state lines as part of a settlement with federal prosecutors.

U.S. prosecutors have charged three former senior Takata executives in Japan with falsifying test results to conceal the defect linked to the recall of about 100 million air bag inflators worldwide.

Recall to continue through 2020

In January, Takata agreed to establish two independently administered restitution funds: one for $850 million to compensate automakers for recalls, and a second $125 million fund for individuals physically injured by Takata's airbags who have not already reached a settlement with the company.

Both funds are expected to be administered by compensation expert Kenneth Feinberg, who managed a similar fund for General Motors.

Automakers in the United States are set to continue recalling defective inflators through 2020. U.S. safety regulators have said automakers are responsible for replacing defective airbags no matter what happens to Takata.

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