Takata to pay $1 bln to settle U.S. air bag probe -sources

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By David Shepardson | NEW YORK

NEW YORK Japan’s Takata Corp is
expected to plead guilty to criminal wrongdoing as early as
Friday as part of a $1 billion settlement with the U.S. Justice
Department over its handling of air bag ruptures linked to 16
deaths worldwide, sources said.

The settlement includes a $25 million criminal fine, $125
million in victim compensation and $850 million to compensate
automakers who have suffered losses from massive recalls, the
sources said.

The settlement also calls for an independent monitor of the
Japanese auto parts manufacturer. It could help Takata win
financial backing from an investor to potentially restructure
and pay for massive liabilities from the world’s biggest auto
safety recall.

The company is poised to plead guilty to wire fraud, or
providing false test data to U.S. regulators, according to the
sources, who were not authorized to discuss the settlement

In 2015, Takata admitted in a separate $70 million
settlement with U.S. auto safety regulators that it was aware of
a defect in its air bag inflators but did not issue a timely

It admitted it provided the regulator, the National Highway
Traffic Safety Administration (NHTSA), with “selective,
incomplete or inaccurate data” dating back at least six years
and also provided automakers with selective, incomplete or
inaccurate data.

The wire fraud charge is expected to be filed in U.S.
District Court in Detroit. The Justice Department is considering
naming Ken Feinberg, a longtime compensation adviser, to oversee
the Takata settlement funds. He declined to comment on Thursday.

The settlement is expected to include restitution to some
victims and automakers, who have been forced to recall vehicles
with the defective inflators. Honda Motor Co and Takata
have settled nearly all lawsuits filed in connection with fatal
crashes. The recall impacts 19 automakers including Ford Motor
Co, General Motors Co, Toyota Motor Corp,
Volkswagen AG Fiat Chrysler Automobiles NV .

Takata spokesman Jared Levy declined to comment.

Deaths linked to the company’s air bag inflators include 11
in the United States – nearly all in Honda vehicles. Regulators
have said recalls would eventually affect about 42 million U.S.
vehicles with nearly 70 million Takata air bag inflators, making
this the largest safety recall in U.S. history.

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.

Senators Richard Blumenthal of Connecticut and Edward Markey
of Massachusetts backed a Takata deal but said in a joint
statement they were “deeply concerned that the DOJ settlement
appears to only target Takata Corporation and no executives.”
The senators also said that if the company “files for
bankruptcy, its new creditors, and not Takata, would be
responsible for paying criminal fines on the company’s behalf.”

Reuters reported in November Takata was considering a
bankruptcy filing for its U.S. unit as the air bag maker looks
for a sponsor to help pay for liabilities related to its faulty
air bag inflators.

The inflators can explode with excessive force, launching
metal shrapnel at passengers in cars and trucks. Many of those
killed were involved in low-speed crashes that they otherwise
may have survived, including a 17-year-old high school senior in
Texas killed last year. At least 184 people have been injured in
the United States as well.

In November 2015, Takata agreed to pay a $70 million fine
for safety violations with U.S. auto safety regulators and could
face deferred penalties of up to $130 million under a NHTSA

The agency named a former U.S. Justice Department official
to oversee the Takata recalls and the company’s compliance with
the safety settlement.

Last month, NHTSA said it would press the auto industry to
accelerate the pace of replacements for defective Takata
inflators and signaled a likely widening of the safety recall.
Only about one third of the inflators recalled have been
replaced, leaving more than 30 million to be fixed.

In June, NHTSA warned that Takata air bag inflators on more
than 300,000 unrepaired recalled Honda vehicles showed a
substantial risk of rupturing, and urged owners to stop driving
the “unsafe” cars pending a fix.

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