Automotive supplier Takata pleaded guilty Friday to criminal charges for falsifying data about its defective air bags, which led to 16 deaths. The Japanese company will pay $1 billion in fines and restitution, federal officials said in announcing the plea agreement.
The company will pay a $25 million criminal fine, $125 million to people injured by the devices and $850 million to automakers that purchased them, said Barbara L. McQuade, the U.S. attorney for the eastern district of Michigan. The U.S. district court in Detroit has appointed attorney Kenneth Feinberg to distribute restitution payments.
Meanwhile, a federal jury in Detroit indicted three Takata workers on charges of concealing defects in the inflators from automakers who bought them. The three -- Shinichi Tanaka, Hideo Nakajima and Tsuneo Chikaraishi -- are Japanese citizens and not in American custody.
“Automotive suppliers who sell products that are supposed to protect consumers from injury or death must put safety ahead of profits,” U.S. Attorney McQuade said.
When defective Takata air bags exploded, they peppered car occupants with deadly metal fragments. The company, with about a fifth of the international air-bag market, says its bags inflate within 0.005 seconds of a collision. It also makes parts ranging from seat belts to child car seats, with air bags making up about a third of its revenues.
In all, 11 American deaths and five more overseas were linked to the faulty air bags. In addition to the $1 billion announced Friday, the U.S. National Highway Traffic Safety Administration has fined Takata $70 million, with as much as $130 million in extra penalties if it doesn’t meet safety measures agreed upon in a consent order.
Takata said that by 2018, it would phase out bag inflators powered by ammonium nitrate, whose flaws are at the center of the problem. It plans to develop a replacement model that solves the safety weaknesses.
The outcry has led to the largest recall in automotive history, more than 100 million vehicles, affecting at least 18 car brands, from Ford to BMW to Toyota.
According to NHTSA, there are 46 million recalled Takata inflators in 29 million vehicles in the U.S. Additional recalls are coming over the next three years, involving 69 million inflators in 42 million vehicles, the agency said.
With its recalls, Takata has substituted other propellants or upgraded the bags. The company said that most of the problems occurred with older devices in hot climates, which prevented proper bag inflation.
The mess has harmed the company finances. Investment firm Jefferies Group has estimated that Takata will end up paying $7 billion, and Bloomberg News has put the figure at more than three times that. As of its last annual report, ending in March, the corporation’s net worth was $1.2 billion, a fraction of its potential liability.
According to the report, Takata suffered losses in two straight fiscal years, losing 13.1 billion yen ($128 million) in the year ending March 31, and 29.6 billion yen the year before that. The company said that was due to lost business and fines related to the air bags. In the July-September quarter this year, because of asset sales, it returned to profitability, for the moment.
From January 2014, when news of the air-bag problem was spread widely, Takata stock, traded in Tokyo, has lost 96 percent of its value.
As a result, the company has put itself up for sale. It has said it will announce the successful bidder in 2017’s first quarter.