Takata is paying a heavy price for its faulty airbag inflators.
The issue has resulted in millions of cars being recalled worldwide and is currently linked to 16 deaths. The company is expected to plead guilty to criminal wrongdoing as part of a $1 billion settlement with the U.S. Justice Department. That hefty sum includes a $25 million criminal fine, $125 million in victim compensation and $850 million to compensate automakers who have suffered losses from the massive recalls.
In the problematic airbags, the inflator can detonate with too much force, shooting metal shrapnel at the occupants of the car.
The settlement will also result in an independent monitor of Takata, which could help the company win financial backing from an investor to help Takata restructure and pay for massive liabilities as a result of the airbag recall.
It is expected that Takata will plead guilty to wire fraud, or providing false test data to U.S. regulators. This isn’t the first settlement with U.S. auto safety regulators for Takata. In 2015, the company reached a separate $70 million settlement and admitted it was aware of a defect in its airbag inflators and did not issue a timely recall.
The Justice Department is considering Ken Feinberg to oversee the Takata settlement funds. Feinberg was in charge of handling GM’s compensation fund from the American automaker’s ignition switch recall.
[Source: Automotive News]