VW faces record fine
DETROIT German automaker Volkswagen has pleaded guilty to conspiracy and obstruction of justice and has agreed to pay a US$4.3 billion (NZ$6.2b) penalty for a brazen scheme to program nearly 600,000 vehicles to cheat on US emissions tests.
The criminal and civil penalty, if approved by a federal judge, would be the largest ever levied by the US government against an automaker.
VW’s total cost of the scandal now has been pegged at about US$21b ( NZ$30b), including a pledge to repair or buy back vehicles.
US regulators confronted VW about the software after West Virginia University researchers discovered differences in testing and real-world emissions of harmful nitrogen oxide.
Volkswagen at first denied the use of the so-called defeat device to deceive the US Environmental Protection Agency, but in September 2015 it finally admitted that the cars were programmed to turn pollution controls on during testing and off while on the road.
Even after that admission, company employees were busy deleting computer files and other evidence, VW’s general counsel Manfred Doess acknowledged to US District Judge Sean Cox yesterday.
Summing up the scandal, Assistant US Attorney John Neal said it was a ‘‘calculated offence’’, not a ‘‘momentary lapse of judgment’’.
The judge said he wanted more time to study the terms of the punishment negotiated by the US Justice Department, including a US$2.8b (NZ$4b) criminal fine. He set a sentencing date of April 21.
‘‘This is a very, very serious offence,’’ Cox said.
An attorney for 300 VWowners who have opted out of a larger court settlement objected to the penalty, contending that owners were entitled to restitution through the criminal court.
But the Justice Department and VW argued that the company had agreed to pay US$11b in restitution to owners through a civil lawsuit, which was sufficient. That was part of a US$15b civil settlement with US environmental authorities and car owners approved last year.
Although the cost is staggering and would bankrupt many companies, VW has the money, with US$33b (NZ$47.6b) in cash on hand.
Under its agreement, VW must cooperate in the investigation.
By cooperating with federal investigators and quickly agreeing to compensate car owners, VW is likely will avoid a massive criminal fine.
Federal sentencing guidelines called for fines of between US$17b and US$34b (NZ$24.5b and $49.1b) due to the size of the plot and because VW employees destroyed documents and data after learning of the government investigation.
The crimes were well-planned and ‘‘went to a very high level in the corporate structure’’, Neal told the court.
Prosecutors said VW got a big discount on the penalty because it cooperated after confessing to the crime.
Doess acknowledged that the scheme lasted for nine years, from 2006 to 2015, and went to the level of just below the company’s management board.
VW attorney Jason Weinstein said VW’s cooperation enabled US authorities to quickly file charges against six German supervisors in the case. Only one is in US custody, though, and it is unlikely REUTERS that the others will be extradited from Germany. One US employee also was charged.
‘‘I’ve never seen a company act more swiftly or aggressively to hold itself accountable for what it did wrong,’’ Weinstein, a former federal prosecutor, told the court.
VW agreed to compensate owners for more than they would have received under criminal statutes. Car owners combined will get up to US$11b (NZ$15.8b) for vehicle buybacks and compensation.
The company also agreed to environmental remediation and electric vehicle investment, and its behaviour will be watched by a monitor for three years.
Both sides asked Cox to sentence VW yesterday.
If he rejects the sentencing recommendation, VW can withdraw its plea.
If the company wants to stick with a guilty plea, Cox still could order harsher penalties.
After the hearing, Weinstein said he wasn’t surprised that Cox delayed the sentencing, because a pre-sentence report was typical in criminal cases.
He also said Cox wanted more time to consider the objection, but he was optimistic that the judge would accept the negotiated deal. AP