Takata will plead guilty in air bag case, agrees to $1 billion settlement

The U.S. Justice Department said on Friday that automotive supplier Takata (7312.T-JP) will plead guilty to criminal misconduct after its defective air bags were linked to at least 16 deaths.

Takata, one of the world's largest suppliers of automotive safety-related equipment, will plead guilty to wire fraud and pay a total of $1 billion in criminal penalties stemming from the company's fraudulent conduct in relation to sales of defective airbag inflators.

The Justice Department said the company will face three years of oversight by independent monitors as part of the plea agreement, according to Reuters, and continue to cooperate fully with the department's ongoing investigation.

A federal grand jury separately indicted three former Takata executives for fraud and conspiracy over the defective air bag inflators, Reporters reported.

"Automotive suppliers who sell products that are supposed to protect consumers from injury or death must put safety ahead of profits," U.S. Attorney Barbara McQuade said in a statement.

"If they choose instead to engage in fraud, we will hold accountable the individuals and business entities who are responsible."

Last year, Takata, which has supplied airbags to Honda, Toyota and other big name automakers, filed reports with U.S. auto safety regulators declaring nearly 14 million air bag inflators defective. Takata then agreed to expand recalls by 35 million to 40 million inflators in several tranches through 2019, adding to the 28.8 million recalled before May 4.

The company is expected to pay a $25 million criminal penalty and $850 million in restitution to automakers who purchased the air bags. Another $125 million will go toward establishing a compensation fund for motorists or relatives the company's air bags harmed.

Takata's board approved the settlement with the department, according to Reuters.