VW’s criminal penalty $2.8B
Judge sees scandal leaving execs secure, hurting car buyers, workers.
DETROIT — A judge on Friday ordered Volkswagen to pay a $2.8 billion criminal penalty in the United States for cheating on diesel emissions tests, blessing a deal negotiated by the government for a “massive fraud” orchestrated by the German automaker.
U.S. District Judge Sean Cox stuck to the plea deal during the sentencing hearing, six weeks after VW pleaded guilty to conspiracy and obstruction of justice in a scheme involving nearly 600,000 diesel cars in the U.S. They were programmed to turn on pollution controls during testing and off while on the road.
“It was an intentional effort on the part of a major corporation to evade U.S. law and lie to U.S. regulators,” Assistant U.S. Attorney John Neal told the judge.
Speaking from the bench in the heart of the global auto industry, Cox said he was amazed that VW would commit such a crime.
“Who has been hurt by this corporate greed? From what I can see it’s not the managers at VW, the ones who get paid huge salaries and large bonuses. As always it’s the little guy,” the judge said, referring to car buyers and VW’s blue-collar workers who might earn less in the future.
Separately, VW is paying $1.5 billion in a civil case, mostly to settle allegations brought by U.S. environmental regulators, and spending $11 billion to buy back cars and offer other compensation.
Seven employees have also been charged with crimes in the U.S., but five are in Germany and are unlikely to be extradited.
U.S. regulators confronted VW about the cheating software after West Virginia University researchers discovered differences in testing and regular driving emissions of harmful nitrogen oxide. VW eventually admitted that the cars were programmed to turn pollution controls on during testing and off while on the road.
Cox urged the German government to “prosecute those responsible for this deliberate massive fraud that has damaged an iconic automobile company.”
In brief remarks to the judge, VW defense attorney Jason Weinstein says the criminal fine is an “appropriate and serious sanction.”
VW general counsel Manfred Doess said the company is not the same one that was caught 18 months ago.
“Volkswagen deeply regrets the behavior that gave rise to this case. … Plain and simple it was wrong,” Doess said. “We let people down and for that we’re deeply
sorry.”
Neal disclosed that a former Justice Department official, Larry Thompson, will serve as a monitor to ensure that VW complies with the plea agreement, which includes three years of probation and complete future cooperation with any inquiries by investigators.
Thompson led the government’s prosecution of Enron and was deputy attorney general under George W. Bush. He more recently served as chief counsel for PepsiCo.
Thompson will oversee the automaker’s compliance
with the Justice Department’s settlement agreement as well as make sure the company is following through with the consent decree. He’ll also be tasked with assessing the company’s compliance program in order to prevent future criminal fraud or environmental violations.
During his stint as deputy attorney general, Thompson contended with a spate of corporate scandals, including Arthur Andersen and WorldCom, in addition to Enron.
Thompson didn’t immediately respond to messages seeking comment.
Choosing a monitor was one of the final pieces to fall into place as Volkswagen tries to put the U.S. criminal emissions case behind it.
While the company’s stock has recovered from the lows plumbed in the immediate aftermath of the crisis, it remains 15 percent below the level before the cheating revelations. The shares on Thursday declined 1 percent to 138.30 euros ($148.35) in Frankfurt trading.