Feds Vow Civil, Possible Criminal Charges After Japanese Airbag Maker Refuses National Recall

WASHINGTON, D.C.— A federal official with the nation’s top auto safety regulator vowed at a House subcommittee hearing on Wednesday that the agency would consider every legal measure available against a Japanese auto parts supplier suspected of providing car manufacturers with faulty airbags that investigators have linked to the deaths of at least five people, four of them Americans.

David Friedman, deputy administrator for the National Highway Traffic Safety Administration, told lawmakers that his agency planned to build the “strongest case possible” against Tokyo-based Takata Corp. and manufacturers BMW, Honda Motor, and Toyota.

“If they refuse to act, we will take them to court,” Friedman said.

Lawmakers took turns rebuking and interrupting representatives of the four companies during a tense two-and-a-half-hour exchange. The hearing took place after Takata refused to meet a Tuesday midnight deadline that U.S. regulators had set for the company to begin national recalls.

Takata executive Hiroshi Shimizu often received the brunt of the questions, with those testifying for the three car manufacturers trying to distance themselves from the auto parts supplier.

“How many people would need to die before you do a national recall?” U.S. Rep. Billy Long (R-Mo.) demanded to know from Shimizu at one point. “Do you have a litmus test?”

Another official, Rep. Marsha Blackburn (R-Tenn.), took a personal turn with her questions when she repeatedly asked the Takata executive whether he was around when the decision was made to green-light what she framed as a less expensive but highly reactive chemical repellant that lawmakers blamed for the airbag ruptures.

“So you were around?” Blackburn demanded to know after accusing Shimizu of dodging her questions. “Yes or no?”

But lawmakers didn’t go any easier on representatives for the big car manufacturers. Friedman testified that regulators made officials for the three auto manufacturers swear under oath about their awareness of the defective airbags from past settlements.

When asked, Friedman indicated that criminal action hadn’t been ruled out for any executives caught lying for the companies.

Airbag ‘Shrapnel’ 

Hearings in both the House and the Senate continue to sour public opinion on Takata, whose shares remained down by more than two percentage points by end-of-day Wednesday.

At issue is what may have caused airbags made by Takata to burst violently, hurtling shrapnel into the air and killing at least five people, 4 of whom were from Florida and Puerto Rico. The Japanese auto parts supplier continues to assert that high levels of moisture and humidity are responsible for the fatal airbag employments.

Federal officials and critics maintain that at least two other states with high levels of humidity, including California and North Carolina, may leave drivers vulnerable to airbag ruptures.

The uproar has led car manufacturers like Honda to issue recalls for their vehicles nationwide and globally. Rick Schostek, executive vice president for the company, testified on Wednesday that Honda — in whose vehicles the known fatalities took place — had pulled more than 6.2 million cars thought to carry the defective airbags.

Takata has also issued recalls, but only for those regions of the United States that seem to exhibit the kind of humidity and moisture considered dangerous for airbags, and only on condition that the driver voluntarily brings in their cars. The three manufacturers are likewise relying on regional voluntary recalls to address the problem.

The representatives for all four companies defended their actions on Wednesday, citing tens of thousands of emails and snail mail letters they claimed to have sent consumers in Florida, Puerto Rico, and a few other states that experience high levels of humidity.

But narrower regional recalls were a major point of contention for House members at the hearing. Friedman had on display a chart that he said clearly showed that other high-humidity states, including parts of Texas, could repeat the fatalities if the airbag defect isn’t addressed with a mandatory national recall.

Lawmakers like Blackburn suggested halfway through the hearing that ammonium nitrate and other chemical repellants may be what’s responsible for the deadly airbag ruptures, with more than one openly asking whether the Japanese auto parts supplier cut corners to save money, risking the lives of drivers in the process.

“I find your response unhelpful and tendentious,” Rep. Leonard Lance (R-Vt.) told Shimizu in reference to a three-page statement Takata released in response to the Tuesday midnight deadline it missed. He added that he thought the company was “diametrically in opposition” to what was best for consumers in the United States and worldwide.

Friedman told lawmakers his agency would continue to investigate the companies, with a public hearing and stiff civil penalties in the range of tens of millions of dollars likely to follow if Takata is conclusively linked to the problems.

The company reportedly faces $35 million in fines for failing to comply with the Tuesday midnight deadline. Friedman told lawmakers he would likely want to pursue $800 million in fines which the Obama administration called for in its most recent budget proposal to Congress.

Image: Hiroshi Shimizu of Takata Corp.