Emissions scandal: Volkswagen to pay record $6.1b in fines

6 execs face charges in the US for role in conspiracy that went on for 10 years

US Attorney-General Loretta Lynch announcing the Volkswagen settlement. She says the Department of Justice will continue to go after those behind the German carmaker's "damaging conspiracy".
US Attorney-General Loretta Lynch announcing the Volkswagen settlement. She says the Department of Justice will continue to go after those behind the German carmaker's "damaging conspiracy".PHOTO: AGENCE FRANCE-PRESSE

WASHINGTON • The Volkswagen Group has agreed to pay the largest criminal fine levied in the United States on a carmaker, to settle charges that it conspired for nearly 10 years to cheat on diesel emission tests. Prosecutors have charged six current and former senior VW executives over their roles in the scheme.

The German carmaker agreed on Wednesday to pay US$4.3 billion (S$6.1 billion) in US civil and criminal fines and to pay California US$153.8 million. In total, VW has now agreed to spend up to US$22 billion in the US to address claims from owners, environmental regulators, US states and dealers.

Among those indicted is Heinz-Jakob Neusser, former head of development for VW Brand, who was suspended in 2015. He was also previously head of engine development. Two other former heads of engine development, Jens Hadler and Richard Dorenkamp, have also been indicted.

Mr Andrew McCabe, the Federal Bureau of Investigation's deputy director, said at a press conference: "It is now clear that Volkswagen's top executives knew about this illegal activity and deliberately kept regulators, shareholders and consumers in the dark - and they did this for years.

"We can't put companies in jail but we can hold their employees personally accountable. We can force companies to pay hefty fines."

Five of the six current and former Volkswagen executives are in Germany and it is unclear whether they will go to the US to face charges, since Germany typically does not extradite its citizens.

The indictment said the executives engaged in a conspiracy to cheat in emissions tests and cover up excess emissions, even as regulators questioned irregularities.

The Justice Department said that in 2006, VW realised it could not meet tougher rules. VW engineers designed a system to detect when cars were being tested. The cars emitted up to 40 times the legally permissible level of pollutants when driven. VW executives destroyed documents and other evidence in an attempt to avoid detection, the department said.

US Attorney-General Loretta Lynch declined to say whether any higher-level executives could face charges. "We will continue to pursue the individuals responsible for orchestrating this damaging conspiracy," she said.

Volkswagen chief executive Matthias Mueller said in a statement that the company "deeply regrets the behaviour that gave rise to the diesel crisis" and vowed to continue changes in how it operates.

One of the six charged is Oliver Schmidt, who was a manager in charge of VW's environmental and engineering office in Michigan. He was arrested in Florida on Saturday. A seventh VW employee pleaded guilty in September.

VW will pay a US$1.5 billion civil fine and US$2.8 billion criminal fine. It will not be required to make additional restitution payments.

According to the plea agreement, the company has fired six employees, suspended eight and disciplined three. The criminal agreement still must be approved by US District Judge Sean Cox in Detroit, while the civil consent decree needs approval from a federal judge in California.

The plea agreement said the carmaker could have been fined as much as US$34.1 billion for its criminal conduct under federal guidelines. The deal surpasses the US$1.2 billion fine that Toyota Motor Corp paid in 2014 for concealing safety defects from US regulators.


A version of this article appeared in the print edition of The Straits Times on January 13, 2017, with the headline 'Emissions scandal: Volkswagen to pay record $6.1b in fines'. Print Edition | Subscribe