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Takata Corporation Pleads Guilty and Is Sentenced To Pay $1 Billion in Criminal Penalties for Airbag Scheme

Summary

On February 27, 2017, Takata Corporation pleaded guilty to wire fraud and was sentenced in U.S. District Court, Detroit, Michigan. The conviction and sentencing were related to the company’s conduct in relation to sales of defective airbag inflators. Takata Corporation was sentenced to a total criminal penalty of $1 billion, including $975 million in restitution, a $25 million fine, and 3 years’ probation.
 
Under a joint restitution order entered at the time of sentencing, two restitution funds will be established: a $125 million fund for individuals who have been or become physically injured by Takata’s airbags and who have not already reached a settlement with the company, and an $850 million fund for airbag recall and replacement costs incurred by auto manufacturers that were victims of Takata’s fraud scheme. A court-appointed special master will oversee the administration of the restitution funds. Takata will also implement rigorous internal controls, retain an independent compliance monitor for a term of 3 years, and cooperate fully with DOT-OIG’s ongoing investigation, including its investigation of individuals.
 
In January 2017, an information was filed charging Takata Corporation with wire fraud stemming from the company’s fraudulent conduct in relation to sales of defective airbag inflators. An indictment was also unsealed charging Tsuneo Chikaraishi, Hideo Nakajima, and Shinichi Tanaka with conspiracy and wire fraud charges in relation to the same conduct.
 
This investigation was based on information that Takata Corporation and its U.S.-based subsidiary, Takata Holdings, Inc., knew about the defective airbags and failed to disclose them to the National Highway Traffic Safety Administration, original equipment manufacturers (OEMs), and the traveling public. Takata is one of the world’s largest suppliers of automotive safety-related equipment, and OEMs relied on the company to provide airbag inflators that met their specifications. Several OEMs were allegedly affected by the defendants’ scheme, including Honda, Toyota, Subaru, and Nissan. The recall associated with Takata’s inflators, which feature an ammonium-nitrate-based propellant, is the largest recall in U.S. history and continues to grow.
 
The individual defendants charged were employed as both engineers and executives at Takata until approximately 2015 and worked in both the United States and Japan. The indictment alleged that the defendants engaged in, and/or caused others to engage in, the practice of deleting, altering, and manipulating airbag-inflator testing data, and that false information was provided to OEMs. Some of the information removed described ruptures that had occurred during airbag-inflator testing. It is alleged that the defendants caused airbag-inflator ballistic test results and effluent-gas test results to be changed on several airbag-inflator products.
 
DOT-OIG is conducting this investigation with the FBI, Department of Justice Criminal Division’s Fraud Section, and U.S. Attorney’s Office, Eastern District of Michigan.