Troubled airbag supplier Takata Corporation said it had reached a settlement agreement with the US Department of Justice (DOJ) regarding previously disclosed issues related to the integrity of inflator validation testing and reporting.
"This settlement fully resolves the DOJ investigation into Takata and all of its subsidiaries and affiliates, including Takata's US subsidiary, TK Holdings (TKH)," the supplier said in a statement.
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But the Takata statement did not mention, as reported by the New York Times and other media, that United States prosecutors had said they had charged three Takata executives with fabricating test data to mask a fatal airbag defect.
The NY Times said Takata agreeing to plead guilty to charges of wire fraud for providing the false data was a rare outcome for businesses accused of wrongdoing.
"They falsified and manipulated data because they wanted to make profits on their airbags, knowing they were creating risk for the end-users, who are soccer moms like me," Barbara McQuade, a United States attorney for the eastern district of Michigan, was quoted as saying at a news conference in Detroit. "The risk they allowed is really reprehensible. We want auto suppliers to know they have to put safety ahead of profits. Cheaters will not be allowed to gain a competitive advantage."
Takata said that, under the terms of the agreement, which is subject to court approval, it had agreed to plead guilty to one count of wire fraud for falsifying testing data and reports that were provided to automakers. It would pay a criminal fine of US$25m and establish a $125m restitution fund for individuals who suffered or will suffer personal injury caused by the malfunction of a Takata airbag inflator, and who have not already resolved their claims. Takata would also establish an $850m restitution fund for the benefit of automakers who received falsified testing data and reports or who have purchased airbag inflators containing phase-stabilised ammonium nitrate. A total payment of $1bn.
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By GlobalDataTakata also agreed to enhance its corporate compliance programme and appoint an independent monitor who will report to the DOJ for a period of three years and monitor compliance with its legal and ethical obligations.
"Reaching this agreement is a major step towards resolving the airbag inflator issue and a key milestone in the ongoing process to secure investment in Takata," said Shigehisa Takada, chairman & CEO of Takata. "Takata deeply regrets the circumstances that have led to this situation and remains fully committed to being part of the solution. We have taken aggressive actions to address past reporting lapses and will continue to work closely with regulators and our automotive customers to address the ongoing recalls and implement new technologies."
Takata has previously acknowledged issues related to the integrity of inflator validation testing and reporting of test results to its customers.
Since February 2016, a steering committee, with assistance from financial and legal advisers, has been working to seek new investment for Takata as part of a broader undertaking to address financial and operational issues and to resolve its inflator issues on a consensual basis with automotive customers.
"While this process remains ongoing, the steering committee has identified several parties that have expressed interest in making an investment in the company. Takata believes that the settlement with the DOJ is an important, positive step in this process," it said.
The supplier said it had strengthened compliance processes, including an improved global whistle blower hotline programe, and implemented a dedicated safety assurance & accountability office and a dedicated product safety office to oversee all product safety issues and concerns for TKH; implemented improvements to testing protocols and data security, including the creation of a data vault to ensure inflator testing results are reliable and accurate; established an independent quality assurance panel led by former secretary of transportation Samuel Skinner and acted on the panel's recommendations; added more than 100 staff in the TKH quality organisation and invested more than $160m in the Inflator group and TKH safety organisation; and invested significant resources to maximise recall completion rates, including launching a targeted digital advertising campaign in the US – the first ever campaign of its type by an automotive supplier – to reach owners of vehicles that have been recalled.
