By on March 10, 2017

Volkswagen Wolfsburg

The Volkswagen diesel emissions saga has reached a logical legal conclusion. The automaker entered a guilty plea in a Detroit federal courtroom this morning, admitting to a vast, 10-year conspiracy to fool environmental regulators through the use of emissions-cheating defeat devices.

As penance, Volkswagen AG must now pay $4.3 billion in criminal fines and civil penalties. That sum can now be added to the multi-billion U.S. buyback of hundreds of thousands of 2.0- and 3.0-liter diesel vehicles manufactured since 2009. While the penalties would be a bitter pill for any automaker to swallow, it’s a fraction of the fine allowed under federal guidelines.

Had the court pursued it, it might have sparked a brand fire sale down at Volkswagen Group.

The plea entered by Manfred Doess, Volkswagen’s general counsel, was accepted by U.S. District Court judge Sean Cox.

“It is pleading guilty because it is guilty of all criminal counts,” said Doess when asked by Cox why the company entered the plea. Under existing laws, the federal government could have hit VW with a fine ranging from $17 billion to $34 billion.

While he didn’t name names, Assistant U.S. Attorney John Neal did dole out harsh words.

“This was a premeditated crime that went to a very high level in the corporate structure,” he said, adding the company destroyed documents to cover traces of its crimes. The plan to deceive the U.S. government was a “very calculated and well-thought-out offense,” he claimed.

By coming clean, the automaker helped lower its financial burden. VW has agreed to spend three years under the watchful eyes of an independent monitor, a move that led Neal to lower the criminal fine portion to $2.8 billion. Last year, the automaker admitted it might have to sell off some of its brands if penalties rose above a certain amount.

Sentencing has been set for April 21.

While the company has chosen to bite the bullet in the face of overwhelming evidence, the saga isn’t over for executives embroiled in the scandal. Six former and current executives were indicted earlier this year on conspiracy charges, with one, Oliver Schmidt, recently arraigned on charges of violating the Clean Air Act.

Investigations continue in VW’s home country. The company’s former CEO, Martin Winterkorn, is under investigation by German prosecutors who question his level of knowledge of the defeat device plot. A former employee has also accused Audi CEO Rupert Stadler of complicity in the deception.

[Source: The Detroit News]

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25 Comments on “Volkswagen Pleads Guilty to Criminal Charges, Will Pay $4.3 Billion Fine...”

  • avatar

    There must be some mistake.

    RobertRyan says its all behind them and its nothing but sunshine and lolly pops now at VW.

    Fake news?

  • avatar

    I wonder if the settlement requires cooperation by VW in the US prosecutions of it’s own employees, or does this mean no more US indictments?

    And, of course, this still doesn’t let them off the hook in Europe.

  • avatar

    4.3 Billion…T-Rump now has a down payment for his wall….

  • avatar

    VW must be a very wealthy company to simply let go of this large chunk of cash. They should have fought tooth and nail against the accusers. This is a bad precedent for the industry. Why should a company be punished for being smart and inventive in the face of incompetent government bureaucracy?

    • 0 avatar

      “VW must be a very wealthy company to simply let go of this large chunk of cash. They should have fought tooth and nail against the accusers. ”

      The problem with VW’s situation is that they government had the goods on them. Proving them guilty would have been almost trivial at this point, because VW had already admitted what it had done. The only thing that would have happened if they fought the charges would be them dragging it out even longer, paying more in attorney fees, and still losing in the end. Though perhaps they might have been hit with a much stiffer fine in that case as well.

      VW got some very, very bad legal advice in the very beginning. Their lawyers basically said if they copped to what they had done they’d get a slap on the wrist a couple hundred million in fines. Instead they’ve already racked up somewhere in around $25-$30 billion in fines and settlements.

      VW originally set aside around $9 billion to cover the case worldwide, back when they thought it was going to be quick and easy.
      Then they settled the 2.0L suit for around $15 billion.
      Then they settled with the US-based dealers for another $1.2 billion.
      Then they settled the 3.0L suit for another $1.2 billion.
      Now they’ve got their criminal and civil fines of $4.3 billion.

      And they’re still working through billions on settlements for Canada and facing charges in other countries as well.

      • 0 avatar

        I work with VW. When the news broke to us about the Goodwill Package we were also told that VW set aside $40 billion to deal with the scandal. The $40 billion figure was initially reported on TTAC but was then adjusted because it seemed like such an enormous figure to deal with what was then not a fully understood scandal.

        So VW very quickly knew what this was going to cost the corporation.

    • 0 avatar

      VW had nothing to fight with. They broke the law repeatedly, cheated and lied until they were backed into a corner by their own actions.

  • avatar

    So…how soon before I can pick up a killer deal on a new Golf S/manual trans? VW has to make sales to pick up that $4.3 billion tab somehow…

  • avatar
    Corey Lewis

    Oh God! We’re having a fire… sale.

  • avatar

    By the time this is all over (Civil suits, governments around the globe), VW will probably have lost many times the money it made by using the defeat software. Id say that is punishment that fits the crime and serves as a substantial deterrent to anyone else who wants who would consider such a path.

    The US has to tread carefully in some respects, they cannot be seen levying fines that are seemingly intended to put VW out of business. Retaliation is a B****. Someone in VW management will go to jail, at least briefly.

    Im sure they have already had board meetings on who the sacrificial lamb will be and how much they will be compensated for falling on their sword.

    • 0 avatar
      SCE to AUX

      Just this fine alone, amortized across 500k cars, comes to $8600/car.

      Most – or all – of them will be bought back at a premium and then crushed.

      Then VW has to answer all the lawsuits.

      So yes, VW has certainly paid more for this than they gained by selling tainted cars. It won’t be over for a while.

      FWIW, a friend returned his Golf TDI with 100k on it for $16k. Then he bought an Outback.

  • avatar

    Well, enjoy your 4.3 billion (is Trump paying attention?). What VW basically says to all EU customers: sorry, you’re not entitled to any compensation as the EU itself went along with the flaky emission testing. Brits included, since this all took place before Brexit (that is still not effective btw).

  • avatar

    Interesting that selling a few dirty cars leads to multi-billion dollar fines and likely jail time for a few top executives and/or engineers, but all the Wall Street financial shenanigans in 2008-09 that caused lots of people to lose homes and their jobs never led to any significant fines for the banks or prison for the bankers.

  • avatar

    but, but, but….

    What about the few rogue engineers that who are truly at fault for the scandal????

  • avatar

    Criminal executives need to be doing jail time.

    We see the same story over and over again:

    1) Executives commit massive white collar crimes to spike their bonuses.
    2) Eventually found out.
    3) Company pays multi-billion dollar fines.
    4) Executives keep all of their bonuses.
    5) Nobody does jail time.

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