While it absolutely pales in comparison to the fines levied in the United States, Volkswagen will still have to fork over a pile to appease the Canadians.
This week, the automaker pleaded guilty to 60 charges relating to its deception of regulators and consumers with emissions-rigged diesel vehicles. While $196.5 million sounds like small potatoes in this day and age, it happens to be the largest monetary fine for an environmental crime in the country’s history.
Corporate missteps requiring an apology — an increasingly common phenomenon in our current outraged era — usually follow a well-worn path. The CEO will issue a statement to the media and public apologizing for dastardly malfeasance and skullduggery (or offending a Twitter user), following it up with a statement posted to the company’s webpage and social media accounts. There will be appeals for forgiveness, perhaps tearful ones, at tense shareholder meetings — especially if the company is Japanese.
Following that, a burst of newfound goodwill appears to repair a tarnished brand.
But what if serious misdeeds, even those resulting in arrests and billions of dollars in fines, could be used to market a new product? Volkswagen went there.
Former Audi CEO Rupert Stadler’s “How I spent My Summer Vacation” story isn’t likely to make any of us jealous. The one-time top dog at the German luxury automaker has cooled his heels in a Bavarian jail ever since German authorities arrested him on suspicion of fraud back in June. Stadler’s arrest served as a shocking escalation in Germany’s investigation into Volkswagen Group’s diesel emissions scandal.
It seems like time behind bars is getting to Stadler. As the suspended executive attempts to gain his release from prison, new details have emerged over the reasons for his arrest.
Jörg Kerner, Porsche’s head of powertrain development, has reportedly been arrested by German authorities for playing an alleged role in Volkswagen Group’s diesel emissions scandal.
Kerner, who sources say is being held on remand due to the potential of being a flight risk, was appointed director of Porsche’s powertrain development division in October 2011. Before that, Kerner worked for supplier Robert Bosch GmbH from 1986 to 2004, after which he oversaw development of engine electronics and software for Audi.
Volkswagen, most recently seen lecturing European governments on the need to ditch the diesel subsidies that, until recently, made it the continent’s most popular fuel, has a bad case of timing.
Just a day after Volkswagen Group CEO Matthias Müller not-so-subtly touted his company’s newfound green bona fides, telling a German newspaper, “We should question the logic and purpose of diesel subsidies,” another diesel-related scandal broke. On Tuesday, Germany’s automobile regulator, KBA, issued a recall of VW’s top-end diesel SUVs.
The reason? Undeclared defeat devices, apparently designed to make the late-model 3.0-liter vehicles run cleaner while undergoing emissions testing. If this doesn’t sound familiar, you’ve been dead for the past two years.
The judge didn’t go easy on the former Volkswagen executive. Oliver Schmidt, 48, former general manager of Volkswagen’s U.S. Environment and Engineering Office, was sentenced to seven years in prison and handed a $400,000 fine Wednesday for his role in covering up the automaker’s diesel emissions deception.
Schmidt’s punishment is the maximum allowed under the plea deal he reached in August. The executive pleaded guilty to two charges relating to the conspiracy to violate the country’s Clean Air Act with a fleet of pollution-spewing diesel cars.
“It is my opinion that you are a key conspirator in this scheme to defraud the United States,” U.S. District Judge Sean Cox of Detroit told Schmidt. “You saw this as your opportunity to shine … and climb the corporate ladder at VW.”
The sentencing wraps up a legal saga that began, unpleasantly, as Schmidt sat on a Miami toilet during a vacation stopover.
Those U.S. Volkswagen Diesels Aren't the Easiest Thing to Fix; VW Rounds Up Scandal Bill to $30 Billion
Twenty-seven billion seemed like an odd number, so Volkswagen upped the financial cost of its diesel emissions scandal to an even $30B. Actually, the extra expense comes entirely from the repair of older U.S.-market vehicles, which are proving less easy to fix than anticipated.
Because of this, VW has to rustle up some extra cash. The automaker set aside $26.7 billion to put the scandal behind it, and this latest price jump has the company pole vaulting over that marker.
This isn’t the only new grief facing VW, however. German media and The New York Times are reporting the arrest of the highest-ranking official so far — VW Group’s former powertrain chief.
I have to admit I’ve been following the story of the looted diesel Volkswagens with more than a healthy amount of interest. These cars are showing up hundreds of miles away, covered by bogus titles, maybe with involvement from various nefarious officials. Clearly this is an American version of a Guy Ritchie heist film or something.
The absolute weirdest and least believable part of the whole thing, however, has nothing to do with the theft of the cars. Rather, it’s in the police response.
A former Volkswagen engineer who helped federal investigators after being linked to the diesel emissions scandal will cool his heels in an American prison.
U.S. District Court Judge Sean Cox sentenced James Liang, 63, to a 40-month term today, tacking on a $200,000 fine for his involvement in the automaker’s diesel deception. Liang is the first Volkswagen employee prosecuted for having a role in the conspiracy.
German media is reporting that former Volkswagen CEO Martin Winterkorn, who resigned shortly after the diesel emissions scandal erupted in September 2015, was informed about the company’s emissions cheating in late July of that year — a month before the automaker claims its executive board learned of the issue.
Several media outlets are reporting that a former senior VW quality officer told Winterkorn on July 27, 2015 that the company “cheated,” Reuters reports.
Nearly two years after the mother of all automotive scandals yanked nine years’ worth of Volkswagens out of the “law-abiding citizen” category and into the environmental slammer, U.S. regulators have approved a fix for older VW 2.0-liter diesel cars.
The fix, which many believed would never happen, received an official thumbs up from the Environmental Protection Agency and California Air Resources Board today. The move means potential salvation for 326,000 otherwise doomed VW and Audi vehicles in the United States.
American investigators, hot on the trail of Volkswagen Group executives and managers with dirty hands, haven’t had the easiest time bringing suspected emissions scandal conspirators to trial. Germany doesn’t extradite citizens facing charges in other countries, making justice a tricky pursuit for U.S. authorities.
So far, only two players in the diesel deception find themselves in the arms of U.S. law enforcement— James Liang, a former executive who worked in California (and has pleaded guilty to conspiracy charges), and Oliver Schmidt, a former U.S. environmental liaison who previously worked out of VW’s Michigan emissions office. Federal agents nabbed him during a Miami layover as the German national returned home from a tropical vacation in January. Six others remain safely in Germany after a U.S. indictment.
Well, expect another trial now. Earlier this week, Munich police arrested an Italian national, Zaccheo Giovanni Pamio, the former head of thermodynamics at Audi’s engine development division. It’s the first diesel-related arrest in Germany and Pamio’s citizenship means he’s a candidate for extradition to the United States.
Now charged in connection to the scandal, American authorities hope Pamio squeals on his bosses at Audi. As for his involvement, the federal government alleges Pamio and others decided a premium sound system was a better use of vehicle space than a proper emission control system.
It’s hard not to imagine Volkswagen as a tempestuous child, prone to mischief and currently on a “time out” after getting caught lobbing spitballs in class. The thought softens the reality of a massive corporate deception that polluted the air and led to tens of billions of dollars in penalties.
As it turns out, serving as Volkswagen’s nanny is exhaustive work. After the U.S. government ordered a monitor to keep an eye on the automaker as part of its wildly expensive settlement, the monitor feels the need to triple his staff.
Is was probably with a sigh of relief that U.S. District Judge Charles Breyer granted final approval to a settlement for owners of 3.0-liter diesel Volkswagen Group vehicles earlier today. The issue has consumed no shortage of court time both before and after last December’s preliminary approval for a buyback, compensation and fix plan.
More than 80,000 Volkswagen, Porsche and Audi models were sold with engines rigged to cheat on emissions tests. Many of those units will now be bought back and others fixed — a plan with a minimum $1.22 billion price tag.
Breyer’s approval marks the end of the automaker’s main legal wranglings in the U.S. It also opens the cash floodgates, as even owners who opt for a fix will see a pile of crisp, clean dollars from VW.
Despite having the worst public image since the Ford Pinto or Chevrolet Vega, Volkswagen’s sidelined 2015 2.0-liter diesel models flew off lots after being approved for sale in mid-April.
A crop of about 11,000 unsold TDIs loitered on dealer lots around the U.S. after being banned from sale by the Environmental Protection Agency in September 2015. In a weak month that saw numerous automakers sink on the sales charts, Volkswagen was a bright light, posting a 1.6-percent increase over April 2016. Much of that success came from still-polluting diesels.
So much for stigma.
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