Update: Jan. 13 2:15 Takata Corp. agreed to plead guilty and pay $1 billion to settle an investigation into its exploding air bags, which have been linked to at least 17 deaths worldwide, the U.S. Justice Department said.
The company will admit to wire fraud for misleading regulators, consumers and car manufacturers about the safety of its air bags, which would explode and spray drivers and passengers with shrapnel, according to court papers. Takata will be subject to an independent compliance monitor while on probation for three years.
Three Takata Corp. executives were accused in a U.S. indictment of misleading federal regulators, consumers and car manufacturers about the company’s exploding air bags as part of a years-long scheme that led to the biggest recall in history.
The indictment of Shinichi Tanaka, Hideo Nakajima and Tsuneo Chikaraishi came just hours before prosecutors filed a wire fraud charge against the Tokyo-based company. Takata is expected to plead guilty and to pay as much as $1 billion to resolve the case, according to people familiar with the matter.
Takata is accused of engaging in a 15-year scheme to cheat its customers by getting them to buy defective air bags. There are 46 million recalled Takata inflators in 29 million vehicles in the U.S., the National Highway Traffic Safety Administration said. More recalls are coming over the next three years, affecting as many as 69 million inflators in 42 million vehicles, the agency said.
The three executives are Japanese citizens and not in U.S. custody. According to prosecutors, they knew that the inflators had experienced ruptures and other failures during testing from about 2000, and routinely discussed fabricating test results, removing unfavorable information -- known as "XX-ing" the data -- and manipulating the reports, according to the indictment.
A U.S.-based spokesman for Takata didn’t have an immediate comment on the indictment and said a statement would be issued later on January 13. Contact information for the three defendants and their lawyers wasn’t immediately available.
The three men are accused of withholding information and data about the faulty air bags from other manufacturers after the equipment began experiencing repeated problems around 2008.
The three conspired to enrich the company and themselves by inducing carmakers to buy air bags with flawed and dangerous inflators by issuing false reports and other information that hid the true condition, according to the indictment.
Nakajima allegedly e-mailed Tanaka and others around February 2004 to explain that he was "manipulating" test data for an inflator. About a year later, Tanaka sent an e-mail to Nakajima, Chikaraishi and another person saying they had "no choice" but to give manipulated data to a carmaker, according to the indictment.
In a March 2005 e-mail, Tanaka again indicated that unfavorable test data had been removed, and a month later directed a junior engineer to "please do XX." Two months later, Nakajima said in an e-mail to several people that they had to "cross the bridge together" and had no choice but to rig data.
By Chris Dolmetsch