Tuesday, Mar 28, 2017
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VW pleads guilty in diesel emissions case

Admission of criminal conduct is firm’s first

DETROIT — Volkswagen AG pleaded guilty Friday in federal court to criminal felony charges over the diesel emissions scandal that has roiled the German automaker for more than a year and cost it tens of billions of dollars in settlements and penalties.

The company had been charged with fraud, obstruction of justice, and making false statements about vehicles it imported into the United States, using software designed to cheat on emissions tests during lab testing that helped deceive environmental regulators.

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As part of Volkswagen’s guilty plea to federal felony charges, the company agreed to pay $4.3 billion in fines and penalties.

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It was the first time the company has pleaded guilty to criminal conduct in any court in the world, a company spokesman said.

The plea was part of a criminal settlement worked out with the U.S. Department of Justice that calls on Volkswagen to pay $4.3 billion in fines and penalties. In a separate civil settlement, the company already agreed to spend $15 billion to compensate its customers in the United States.

The Volkswagen case is the latest in which the justice department has extracted a guilty plea from an automotive company accused of wrongdoing. Last month, Takata, the Japanese auto parts maker, pleaded guilty to criminal charges linked to faulty air bags, agreeing to pay $1 billion in fines and penalties. Three Takata executives face criminal charges.

 

That marks a contrast with the settlement the Justice Department reached with General Motors over faulty ignition switches that were linked to more than 100 deaths. GM paid $2 billion in fines, but no executives were charged.

Manfred Doess, Volkswagen’s general counsel, acknowledged in court that the carmaker knowingly and intentionally mounted a conspiracy to violate the Clean Air Act and deceive federal environmental regulators, and destroyed or concealed records and other data in a bid to cover up its actions.

He maintained, however, that the conspiracy was carried out by midlevel managers and engineers without the knowledge of the top executives.

Judge Sean Cox of the U.S. District Court for the Eastern District of Michigan heard a brief objection to the settlement from a lawyer representing about 300 Volkswagen customers seeking higher compensation than what the company already agreed to pay in its civil settlement.

The court accepted the plea but delayed sentencing until April 21.

Volkswagen’s guilty plea does not end its legal troubles.

Federal prosecutors have announced criminal charges against six Volkswagen executives, including a former head of development of the Volkswagen brand and the head of engine development. One, Oliver Schmidt, was arrested in Florida in January and remains in custody. The other five are believed to be in Germany.

Shareholder lawsuits in the United States and Europe, meanwhile, could cost an additional $10 billion.

Volkswagen developed the illegal software more than a decade ago after it planned to ramp up sales of diesel cars and sport utility vehicles in the United States, but learned it could not get them to meet emissions requirements.

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