Latest
Recommended
Published: Fri, January 13, 2017
Economy | By Melissa Porter

VW set to pay $4.3bn over diesel scandal


German auto giant Volkswagen (VW) will admit guilt and pay a record $4.3bn in fines to settle a diesel emissions cheating scandal, according to United States officials. The company also said it will face oversight by an independent monitor over the next three years.

According to the US Justice Department, Volkswagen officials are alleged to have told engineers, in 2012, to destroy all documents relating to the cheating and that company lawyers pushed for employees to do the same.

Still, the criminal charges are a major breakthrough for a Justice Department that been under pressure to hold individuals accountable for corporate misdeeds ever since the 2008 financial crisis.

The federal indictments and plea deal were announced Wednesday by the Justice Department in Washington. "This is good news", Evercore ISI said in a research note. A change in administration may have delayed a final settlement for months.

News of the impending settlement comes as prosecutors move to tie up charges against the German automaker. "It's a major relief that this doesn't get dragged into the new U.S. administration", Evercore ISI said.

Volkswagen admitted installing software in diesel engines on almost 600 000 VW, Porsche and Audi vehicles in the United States that activated pollution controls during EPA testing and switched them off in real-world driving.

".Participating in a conspiracy to defraud the United States and VW's US customers and to violate the Clean Air Act by lying and misleading the EPA and USA customers about whether certain VW, Audi and Porsche branded diesel vehicles complied with US emissions standards, using cheating software to circumvent the US testing process and concealing material facts about its cheating from USA regulators".

Each of the six individuals indicted faces one count of conspiracy to defraud the United States, in addition to violations of the Clean Air Act and defrauding VW's USA customers by making false statement to US regulatory agencies and the public.

VW still must spend the next two years buying back or fixing dirty USA vehicles and faces unresolved lawsuits from investors and about 20 U.S. states.

Today Volkswagen finally reached an agreement with United States regulators attempting to put a bookend on one of the most expensive corporate scandals in history.

The agreement will require the company to pay a $2.8 billion criminal penalty and a separate $1.5 billion civil claims penalty.

It adds to a $15bn (£12.3bn) civil settlement with environmental authorities and auto owners in America under which it agreed to buy back up to 500,000 vehicles.

VW chief executive Matthias Mueller said the company "deeply regrets" its conduct over the course of the emissions scandal.

Overall diesel sales fell markedly in the USA previous year after the rigging was discovered. That figure should put VW ahead of Japanese rival Toyota as the world's largest vehicle producer by volume for the year.

The agreement would mark another step in VW's effort to extricate itself from the diesel emission cheating scandal.

Like this: