DOJ indicts 6 Volkswagen executives, automaker will pay $4.3 billion in plea deal

The automaker said it would also have to submit to third-party audit for compliance.

Megan Geuss – Jan 11, 2017 3:10 pm | 39

The US Justice Department announced on Wednesday that Volkswagen would pay $4.3 billion in civil and criminal fines and plead guilty to three criminal charges pertaining to the automaker’s diesel emissions scandal. The DOJ also announced an indictment of six high-level VW Group executives, who are charged with lying to regulators and destroying documents.

Working with US Customs and Border Patrol, the DOJ brought against VW Group charges of defrauding the US government, committing wire fraud, and violating the Clean Air Act. As part of the settlement, VW Group has agreed to submit to three years of criminal probation, which will require the German automaker to "retain an independent monitor to oversee its ethics and compliance program." It has also agreed to cooperate with the DOJ's ongoing investigations into individual executives that may have been involved with the scandal.

For the past 17 months, the automaker has maintained that none of its executives were involved with the diesel scandal, in which illegal software was discovered on Volkswagens, Audis, and Porsches to alter the cars' emissions controls depending on whether the cars sensed they were under real-world driving conditions or lab conditions. Instead, VW Group claimed, "rogue engineers" were responsible for the placement of the emissions cheating software on the cars.

After the software was discovered, VW Group admitted that its cars did have mechanisms to reduce the effectiveness of the emissions controls on its so-called "Clean Diesel" cars. Earlier this year, the Justice Department and a class-action group of consumers pursued civil penalties from VW Group, leading to historic settlements of many billions of dollars earlier this year.

This new agreement repudiates VW Group's assertion that its executives were wholly innocent of tampering with the cars' emissions control systems. The indicted VW Group executives include Richard Dorenkamp, Bernd Gottweis, Jens Hadler, Heinz-Jakob Neusser, Jürgen Peter, and Oliver Schmidt. Schmidt, a former emissions compliance executive for VW Group, is the only executive currently in the US—he was arrested over the weekend by the FBI on charges that he knew about the cheating software and lied to federal regulators about it.

Among the other five men indicted, Richard Dorenkamp, head of VW’s technical development for lowest emission engines, was suspended from VW Group in 2015; Bernd Gottweis, a retired VW Group executive, apparently warned CEO Martin Winterkorn that the company's cars could be found with defeat devices; Jens Hadler worked as executive director of powertrain development at Volkswagen in 2008; Heinz-Jakob Neusser oversaw Volkswagen research and development; and Jürgen Peter was a Volkswagen engineering executive who implored his colleagues via internal e-mail to "Come up with the story please!" when the California Air Resources Board started pressing Volkswagen on discrepancies in emissions tests that persisted after VW Group issued a "fix."

So far, Volkswagen has agreed to pay $15 billion to compensate victims of the 2.0L diesel engine scandal, $1 billion to settle charges related to 3.0L diesel vehicles (although owner compensation hasn’t been decided on yet), and $1.2 billion to compensate US Volkswagen dealers, who were unaware that the cars they were selling were not in compliance with US emissions regulations. One engineer, James Liang, has pleaded guilty.

According to the Associated Press, this fresh $4.3 billion settlement "is the largest ever levied by the government against an automaker, eclipsing the $1.2 billion fine against Toyota in 2014 over safety issues related to unintended acceleration."

Assistant Attorney General Leslie Caldwell, speaking at the DOJ's press conference, said that VW Group executives were largely responsible for the scandal, describing a company culture where "lower-level people" expressed concerns and "higher-level people" decided to move forward with planting the illegal software.

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