The payout includes $25 million in criminal penalties, $125 million for victim compensation, and $850 million to auto-makers who issued recalls, to be distributed by the famous negotiator Kenneth Feinberg.
The settlement calls for an independent monitor for Takata, which might help the company get financial backing for an expected sale sometime this year — likely to another auto-parts supplier or investor.
The Justice Department also charged three Takata executives in a criminal investigation. Prosecutors say the men concealed airbag tests, dating back to 2000, showing that the inflators could explode.
Takata airbag inflators can explode too forcefully and spray metal shrapnel into drivers and passengers. At least 16 deaths and more than 180 injuries have been reported worldwide. Over 42 million vehicles in the U.S. were recalled, and most have not been repaired.
As of December 2016, only 12.5 million — or about 18% — of the inflators had been replaced, according to U.S. government officials.
The repairs will continue through 2020 as parts are manufactured. The riskiest vehicles were recently given priority by the Department of Transportation.
The “Priority 1” vehicles include the 2001-2005 Honda Civic, 2002-2006 Honda CR-V, 2003-2006 Honda Odyssey, 2003-2008 Honda Pilots, and 2006 Honda Ridgeline. Honda was the biggest customer of Takata and several deaths occurred in older-model Civics.
Airbag inflators are essentially small bombs — metal containers that contain ammonium nitrate, an explosive fertilizer chemical used in the Oklahoma City bombing in 1991.
The problem is that ammonium nitrate is unstable, especially when exposed to heat and humidity cycles over the lifetime of a vehicle. Instead of burning safely, it sometimes burns all at once and blows up the metal canister.
Airbag manufacturers can reduce this risk by mixing ammonium nitrate with other chemicals that dry it out — but nothing is quite as cost-effective as ammonium nitrate on its own.
Source: Takata Corporation Agrees to Plead Guilty and Pay $1 Billion in Criminal Penalties for Airbag Scheme