As DOJ Nears Takata Settlement, Blumenthal & Markey Call for Stiff Punishment Against Individual Takata Executives

Press Release

As the Department of Justice (DOJ) nears a criminal settlement with Takata Corporation, U.S. Senators Richard Blumenthal (D-CT) and Edward J. Markey (D-MA) are calling for the settlement to include stiff punishment against individual Takata executives responsible for an air bag defect that has resulted in 11 deaths and more than 180 injuries in the United States.

"While we strongly support criminal prosecution, we are deeply concerned that the DOJ settlement appears to only target Takata Corporation and no executives. As you know, Takata knew that ammonium nitrate, the problematic propellant at the center of the Takata airbag defect, was prone to failure as early as 2001, and yet it hid these problems and continued to sell dangerous inflators. There is also evidence that Takata employees falsified and manipulated test data to give its inflators the appearance of safety and efficacy," the Senators wrote.

If the settlement only holds the company as a whole liable and the company then files for bankruptcy, its new creditors, and not Takata, would be responsible for paying criminal fines on the company's behalf. The Senators expressed concern in today's letter that this scenario would essentially let wrongdoers off the hook.

"Furthermore, as you may know, Takata is actively soliciting new investors and contemplating bankruptcy or similarly major restructuring in order to keep factories running and manufacturing replacement airbags," the Senators continued. "It is vital that any such restructuring protect consumers, the company's ability to develop and deploy safe replacement airbags, and deter future similar wrongdoing. Since bankrupt corporations pay criminal fines out of the pockets of their new creditors--not their executives or shareholders--we are concerned that a settlement that does not hold individual executives accountable will not effectively halt wrongdoing and deter future misconduct. Rather, it would just transfer the punishment."

The Senators first expressed concerns with NHTSA's limited recalls and testing of Takata airbags in October 2014. They have also called on Takata to recall all vehicles with ammonium nitrate-based airbags, and expressed serious concern about the pace of Takata recalls and repairs. Earlier this year, the senators sent a letter urging President Obama to recall every vehicle with airbags using ammonium nitrate as their propellant, and to use "every tool at his disposal" to accelerate the repair of all vehicles with potentially-lethal Takata airbags.

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