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Takata Pleads Guilty to Fraud, Tries to Move Forward

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After a record year of Takata air bag recalls in 2016, recalls continue to rise. Several automakers have announced additional recalls, adding to the already millions of inflators that were previously recalled.

Honda, the automaker most affected by Takata airbag recalls, recently announced an additional 772,000 vehicles recalled with defective front passenger seat air bag inflators. Ford followed suit, recalling an additional 816,000 vehicles for passenger-side front airbags.

According to NBC News, altogether, 13 automakers, including Audi, Nissan, Subaru, BMW, Mitsubishi, and Mazda named hundreds of thousands of vehicles in the latest round of recalls. Meanwhile, Takata has pled guilty to charges of wire fraud for providing false data masking the airbag defect.

Takata Pleads Guilty to FraudThe U.S. Department of Justice announced the deal with the

The U.S. Department of Justice announced the deal with the airbag maker on January 13, 2017. Takata agreed to plead guilty to the one criminal charge and to pay $1 billion in fines and restitution for concealing the problems with its airbags for years. As part of the agreement, Takata will also face three years of oversight by independent monitors.

It is expected that the company will pay $25 million for a criminal penalty, along with $850 million in restitution to automakers, and $125 million to consumers who were harmed by the defective airbags. It is believed that attorney Kenneth Feinberg, who organized the compensation fund for the GM ignition switch problems, will also be appointed to distribute Takata airbag payments.

Prosecutors also charged three executives at the company with fabricating test data to mask the air bag defect, and for engaging in fraud and conspiracy. Takata suspended all three last year. These three executives have been indicted for falsifying and altering tests showing that Takata air bag inflators could rupture. They are expected to be extradited to the U.S. for trial.

This agreement may make it more difficult for Takata to defend itself in the many lawsuits it’s currently defending. Takata air bags have been linked with 16 deaths worldwide and over 180 injuries. The devices can explode upon deployment, sending shrapnel into the interior of the vehicle and potentially injuring or even killing the driver and/or passengers.

Takata to be Sold in 2017

According to the New York Times, Takata hopes that with this agreement it can begin to put its problems behind it, and move forward. It is expected that the company will be sold, a move that’s seen as a potential “rescue” for the financially strapped company. A sale would be best for automakers, because Takata remains the second largest global producer of airbags, and also supplies many automakers with seatbelts.

Potential buyers at this point include the biggest airbag manufacturer, Autoliv, based in Sweden, as well as Key Safety Systems, Flex-n-Gate, and Daicel, a chemical company that already supplies raw materials to Takata. The sale is expected to go through sometime this year.

Meanwhile, recall repairs continue. Takata has agreed to recall and replace all inflators that don’t have a “desiccant” or drying agent by the end of 2018.