Thursday, September 21, 2017

Volkswagen: Draft deal in scandal contains $4.3B in fines



By on January 10, 2017

By David McHugh

FRANKFURT, Germany — German automaker Volkswagen AG said Tuesday that it was in “advanced talks” with United States authorities over a proposed settlement in its diesel emissions scandal under which the company would pay $4.3 billion in criminal and civil fines.

The draft settlement with the U.S. Department of Justice and U.S. Customs and Border Protection would include the appointment of an independent monitor to oversee the company’s compliance and control measures for three years.

FILE - In this July 19, 2016, file photo, New York Attorney General Eric Schneiderman announces a lawsuit against Volkswagen in New York. A federal judge on Friday, Dec. 16, 2016, planned to hear whether Volkswagen, U.S. regulators and attorneys for vehicle owners had reached a deal for the remaining 80,000 cars caught up in the company’s emissions cheating scandal. U.S. District Judge Charles Breyer in San Francisco was set to get an update about the settlement talks. (AP Photo/Mark Lennihan, File)

In this July 19, 2016, file photo, New York Attorney General Eric Schneiderman announces a lawsuit against Volkswagen in New York. (Mark Lennihan, File/AP)

A company statement issued Tuesday said that under the proposal Volkswagen would agree to “a guilty plea” to criminal law provisions.

The draft needs to be approved by Volkswagen’s boards and U.S. courts. Volkswagen said its management board of top executives, which includes CEO Matthias Mueller, and its board of directors would deal with the issue “in the very short term,” as soon as Tuesday or Wednesday.

“A final conclusion of the settlement agreement is further subject to the execution by the competent U.S. authorities and to the approval of the competent U.S. courts,” the company said.

The penalties would exceed the amounts Volkswagen has set aside to cover costs from the scandal, but the specific impact on 2016 earnings “cannot be defined at present,” the statement said. Volkswagen had already deducted 18.2 billion euros ($19.2 billion) from earnings to account for the expected costs of fines, settlements and recalls.

The company has admitted equipping diesel cars with software that turned up emissions controls when the car was being tested, and turned them down during normal driving, improving engine performance but exceeding emission limits.

Volkswagen has reached a $15 billion civil settlement with environmental authorities and car owners in the U.S. under which it agreed to buy back up to 500,000 vehicles. The company also faces an investor lawsuit and criminal probe in Germany.

In all, some 11 million vehicles worldwide were equipped with the software.

The scandal was revealed in September 2015, when the U.S. Environmental Protection Agency issued a notice of violation. CEO Martin Winterkorn resigned and was replaced by Mueller. The company has apologized and brought in U.S. law firm Jones Day to investigate.

Oliver Schmidt, the company’s former head of U.S. environmental compliance, was arrested over the weekend in Florida. Another employee, engineer James Liang, has pleaded guilty in the criminal case.

In a 2014 agreement with the U.S. Justice Department, Toyota agreed to pay a $1.2 billion fine over unintended acceleration problems. Similarly, General Motors agreed in 2015 to pay $900 million to resolve a deadly ignition-switch scandal, striking a deal with the Justice Department that avoided criminal charges against individual executives.

image_print

You must be logged in to post a comment Login

Start your Free Trial for a limited time!