Volkswagen fined $4.3B; 6 executives indicted
Automaker cheated on emissions tests
WASHINGTON — Six highlevel Volkswagen employees from Germany were indicted in the U.S. on Wednesday in the VW emissions-cheating scandal, while the company itself agreed to plead guilty to criminal charges and pay $4.3 billion — by far the biggest fine ever levied by the government against an automaker.
In announcing the federal charges and the plea bargain, Justice Department prosecutors detailed a large and elaborate scheme inside the German automaker to commit fraud and then cover it up, with at least 40 employees allegedly involved in destroying evidence.
“Volkswagen obfuscated, they denied and they ultimately lied,” U.S. Attorney General Loretta Lynch said.
Prosecutors may have trouble bringing the executives to trial in the United States. German law generally bars extradition of the country’s citizens except within the European Union. Justice Department officials expressed little optimism that the five VW executives still at large will be arrested, unless they surrender or travel outside Germany.
Still, the criminal charges are a major breakthrough for a Justice Department that has been under pressure to hold individuals accountable for corporate misdeeds ever since the 2008 financial crisis.
U.S. authorities are still investigating just how high the scheme went and held out the possibility of charges against more VW executives. “We will continue to pursue the individuals responsible for orchestrating this damaging conspiracy,” Lynch said.
VW admitted installing software in diesel engines on nearly 600,000 VW, Porsche and Audi vehicles in the U.S. that activated pollution controls during government tests and switched them off in real-world driving. The software allowed the cars to spew harmful nitrogen oxide at up to 40 times above the legal limit.
U.S. regulators confronted VW about the software after university researchers discovered differences in testing and real-world emissions. Volkswagen at first denied the use of the so-called defeat device but finally admitted it in September 2015.
Even after that admission, prosecutors said, company employees were busy deleting computer files and other evidence.
The fines easily eclipse the $1.2 billion penalty levied against Toyota in 2014 over unintended acceleration in its cars. VW also agreed to pay an additional $154 million to California for violating its clean air laws.
The penalties bring the cost of the scandal to VW in the United States to nearly $20 billion, not counting lost sales and damage to the automaker’s reputation. Volkswagen previously reached a $15 billion civil settlement with U.S. environmental authorities and car owners under which it agreed to repair or buy back as many as a half-million of the affected vehicles.
Although the cost is staggering and would bankrupt many companies, VW has the money, with $33 billion in cash on hand.
As for why the fine was so big, “the premeditation here was very significant and that was at a very high level in the company,” said Leslie Caldwell, an assistant U.S. attorney general.