Takata Pleads Guilty to Felony in $1 Billion Settlement
"Destruction of the corporation would probably have been a fair outcome in this case," said the judge.
As predicted, on Monday Japan's Takata Corp. pled guilty in a U.S. federal court to felony charges stemming from its faulty airbag inflators as part of a $1 billion settlement. The settlement includes compensation funds for both automakers and the victims of its faulty inflators, and the guilty plea removes "a major obstacle to its potential sale or restructuring, according to Reuters.
U.S. District Court Judge George Steeh, who ruled on the case, pulled no punches, saying "destruction of the corporation would probably have been a fair outcome in this case." But Steeh opted not to impose the stiffest fine allowed, up to $1.5B, because bankrupting the company would delay efforts to replace faulty inflators still on the road, Reuters reports.
Automakers including Honda, Nissan, BMW, Ford, Mazda, Toyota are set up to receive compensation funds of up to $850 million to replace the inflators—though the actual cost to replace could be "5, 6 or 9 times" that amount, Steeh said—but some lawyers and lawmakers want those funds held until the manufacturers are themselves cleared of wrongdoing; the six automakers previously listed are the subject of lawsuits by vehicle owners who allege the manufacturers knew about Takata's defective inflators for years, but kept using them anyway.
A group of U.S. senators an increase to the $125 million in compensation funds allotted to individual victims, and said in a statement that "no automaker should receive a single dollar until we fully understand their involvement in this fraud and how they so massively failed to protect their customers.
"While today’s guilty plea from Takata is welcome news, this is not nearly the end of this sad saga," the statement read.