Takata to pay $1 billion in U.S. settlement -sources

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(Adds details of agreement, background)

By David Shepardson

NEW YORK Japan’s Takata Corp is
expected to agree to plead guilty to charges as early as Friday
as part of a $1 billion settlement with the U.S. Justice
Department to resolve a government investigation into deadly air
bag ruptures, sources said.

The settlement includes a $25 million criminal fine, $125
million in victim compensation and $850 million to compensate
automakers who have suffered losses from massive recalls, the
sources said, as well as an independent monitor of the Japanese
auto parts manufacturer.

The company is poised to plead guilty to wire fraud charges,
or providing false test data to U.S. regulators. In 2015, Takata
admitted in a separate $70 million settlement with U.S. auto
safety regulators that it was aware of the inflator defect but
did not issue a timely recall.

It admitted it provided the regulator, National Highway
Traffic Safety Administration (NHTSA), with “selective,
incomplete or inaccurate data” dating back at least six years
and also provided automakers with selective, incomplete or
inaccurate data.

The wire fraud charge is expected to be filed in U.S.
District Court in Detroit. The Justice Department is considering
naming Ken Feinberg, a long-time compensation adviser, to
oversee the Takata settlement funds. He declined to comment
Thursday.

The settlement is expected to include restitution to some
victims and automakers, who have been forced to recall vehicles
with the defective inflators.

Takata spokesman Jared Levy declined to comment.

The company’s air bag inflators have been linked to at least
16 deaths worldwide, including 11 U.S. deaths – nearly all in
Honda Motor Co vehicles. Regulators have said recalls
would eventually affect about 42 million U.S. vehicles with
nearly 70 million Takata air bag inflators, making this the
largest safety recall in U.S. history.

Takata is seeking a financial investor to help pay for huge
liabilities and potentially restructure to cope with massive
liabilities from the world’s biggest auto recall.

The Wall Street Journal reported that Takata is expected to
agree to come up with the $1 billion within a year or when it
secures a financial backer.

The faulty inflators may explode with excessive force,
launching metal shrapnel at passengers in cars and trucks. Many
of those killed were involved in low-speed crashes that they
otherwise may have survived, including a 17-year-old high school
senior in Texas killed last year.

In November 2015, Takata agreed to pay a $70 million fine
for safety violations with U.S. auto safety regulators and could
face deferred penalties of up to $130 million under a settlement
with the NHTSA.

The agency named a former U.S. Justice Department official
to oversee the Takata recalls and the company’s compliance with
the safety settlement.

Last month, NHTSA said it would press the auto industry to
accelerate the pace of replacements for defective Takata air bag
inflators and signaled a likely widening of the industry’s
largest recall. Only about one third of inflators recalled to
date has been replaced, leaving tens of millions to be fixed.

In June, NHTSA warned that Takata air bag inflators on more
than 300,000 unrepaired recalled Honda vehicles showed a
substantial risk of rupturing, and urged owners to stop driving
the “unsafe” cars until the issue has been fixed.



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