Volkswagen to plead guilty, pay $4.3B for U.S. emissions cheating scandal

By Doug G. Ware  |  Jan. 11, 2017 at 9:10 AM
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WOLFSBURG , Germany, Jan. 11 (UPI) -- Volkswagen Group has agreed to plead guilty to felony criminal charges and pay more than $4 billion in penalties for its covert attempts to cheat U.S. emissions laws with hundreds of thousands of its diesel vehicles, the company announced Wednesday.

Volkswagen AG said it reached an agreement with the U.S. government to resolve the scandal, which includes guilty pleas to three charges, including conspiracy to defraud American customers and obstruction of justice.

The German automaker will also pay a criminal fine of $2.8 billion, $1.45 billion in civil penalties and another $50 million to settle potential claims under the U.S. Financial Institutions Reform, Recovery and Enforcement Act (FIRREA).

The costly settlement closes one of the largest automotive scandals in history, in which Volkswagen knowingly installed "defeat devices" on nearly 600,000 of its diesel vehicles in the United States that allowed the cars to clear emissions laws when tested, only to return the vehicles to illegal exhaust levels once they left the shop.

"Volkswagen deeply regrets the behavior that gave rise to the diesel crisis," Volkswagen AG CEO Matthias Müller said in a statement Wednesday. "The agreements that we have reached with the U.S. government reflect our determination to address misconduct that went against all of the values Volkswagen holds so dear."

"We promised that we would get to the bottom of it and find out how it happened," VW Chairman Hans Dieter Pötsch added. "We are no longer the same company we were 16 months ago. The Supervisory Board and the Management Board have faced up to past actions."

Also Wednesday, a federal grand jury returned indictments for six Volkswagen officials in the case -- Heinz-Jakob Neusser, Jens Hadler, Richard Dorenkamp, Bernd Gottweis, Oliver Schmidt and Jürgen Peter, all of Germany. They are charged with conspiracy to defraud the United States and American customers and violate the U.S Clean Air Act. Four of them also face charges of wire fraud.

Neusser, 56, was head of development for VW Brand and was also on the automaker's management board.

"Volkswagen's attempts to dodge emissions standards and import falsely certified vehicles into the country represent an egregious violation of our nation's environmental, consumer protection and financial laws," U.S. Attorney General Loretta E. Lynch said in a statement Wednesday. "In the days ahead, we will continue to examine Volkswagen's attempts to mislead consumers and deceive the government."

"This wasn't simply the action of some faceless, multinational corporation. This conspiracy involved flesh-and-blood individuals who used their positions within Volkswagen to deceive both regulators and consumers," Deputy Attorney General Yates added. "We've followed the evidence -- from the showroom to the boardroom -- and it brought us to the [indicted] people."

According to the charges, Volkswagen began installing the cheat devices on 2009 model year vehicles sold in the United States and continued equipping them through the 2016 model year. The company decided to use them so the vehicles could pass stricter U.S. emissions laws.

"Blatant violations of U.S. customs and environmental laws will not be tolerated," Acting Deputy Secretary Deyo said.

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