US Justice Department, Volkswagen, discuss settling criminal probe
Fine could be the largest ever imposed on an automaker
Volkswagen AG (VW) and the US Justice Department have held preliminary settlement about resolving a criminal probe into the automaker’s diesel emissions scandal, two sources briefed on the matter said.
Reuters reported in June that a criminal settlement could include a consent decree, an independent monitor overseeing the German automaker’s conduct and significant yet-to-be determined fines for emissions violations.
The Wall Street Journal has also reported that the fines could top $1.2 billion.
The pace of VW’s internal investigation together with complications from separate civil suits filed in July by three US states have slowed progress on reaching a settlement of the criminal investigation, according to people familiar with the probe.
The Justice Department declined to comment.
In June, VW agreed to pay $15.3 billion after admitting it cheated on US diesel emissions tests for years. The company agreed to buy back vehicles from consumers and provide funding that could benefit makers of cleaner technologies.
VW agreed to set aside $10.033 billion to cover buybacks or fixes for 475,000 2.0 liter diesel cars and sport utility vehicles that used illegal software to defeat government emissions tests.
Under the Justice Department deal, VW will spend $2 billion over 10 years to fund programs directed by California and EPA to promote construction of infrastructure to charge electric vehicles, development of zero-emission ride-sharing fleets and other efforts to boost sales of cars that do not burn petroleum.
VW also agreed to put up $2.7 billion over three years to enable government and tribal agencies to replace old buses or to fund infrastructure to reduce diesel emissions.
VW could face billions of dollars more in costs in the US if it is forced to buy back 85,000 3.0 liter Audi, Porsche and VW cars and SUVs sold since 2009.
Last month, three US states led by New York filed suits seeking hundreds of millions of dollars.
The suits accused senior executives at Volkswagen, including its former chief executive, of covering up evidence that the German automaker had cheated on US diesel emissions tests for years.
A VW spokesman said the company “is committed to earning back the trust of our customers, dealers, regulators and the American public. As we have said previously, Volkswagen is cooperating with federal and state regulators in the US, including the Department of Justice, and our discussions are continuing toward a resolution of remaining issues.”
The fine to resolve the US criminal investigation could be the largest ever imposed on an automaker, surpassing the $1.2 billion paid by Toyota Motor Corp in 2014 to resolve a Justice Department investigation into its handling of sudden unintended acceleration incidents.
In September, General Motors Co paid $900 million and signed a deferred-prosecution agreement to end a Justice Department investigation into its handling of an ignition-switch defect linked to 124 deaths. Both automakers agreed to three years of oversight by an outside monitor.
In its home country of Germany, Volkswagen got some good news.
The automaker announced on Sunday that it had won German regulatory approval for technical fixes on another 460,000 diesel cars with illicit emissions control software, raising the number of vehicles cleared for repair to more than 5 million.
Approval by Germany’s motor vehicle authority KBA is valid for countries throughout Europe where 8.5 million diesel cars are affected by Volkswagen’s emissions test-rigging scandal. About 11 million autos are implicated globally.
In the US, where VW’s manipulations came to light eleven months ago, the German group still lacks technical fixes and is in the process of testing hardware and software that could help it avoid having to buy back about 475,000 affected cars.
VW has said that Germany’s KBA had signed off on a fix for models with smaller 1.2 liter diesel engines, such as the Polo subcompact and Spanish division Seat’s Ibiza model.
VW group models with 1.2 liter and 2.0 liter engines only require a software update on pollution control systems, whereas about 3 million 1.6-liter engines, besides the software update, also require a mesh to be installed near the air filter.