Volkswagen Pleads Guilty on Criminal Charges; One Executive Arrested

 

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Volkswagen has pleaded guilty to three criminal felony charges and will pay $ 4.3 billion to settle with even more U.S. federal agencies as part of its ongoing diesel emissions scandal.

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The Department of Justice announced Wednesday that VW will pay $ 2.8 billion in criminal fines resulting from a “conspiracy to defraud the United States” in violation of the Clean Air Act, obstruction of justice for “destroying documents related to the scheme” and making false statements about emissions compliance upon importing all 590,000 affected cars into the U.S. Another $ 1.45 billion settles civil violations with the Environmental Protection Agency and the U.S. Customs and Border Protection. Finally, VW will pay a $ 50 million civil fine in violation of the Financial Institutions Reform, Recovery and Enforcement Act for underwriting loans and leases for the affected cars. A corporate compliance monitor will oversee certain actions and filings for three years as part of the company’s probation terms.

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A separate DOJ indictment has warrants out for six VW executives allegedly involved in the emissions cover-up since at least 2007. Oliver Schmidt, formerly general manager of the company’s environmental office in Michigan, was arrested by the FBI on Saturday while visiting Miami.

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The other five high-ranking executives are in Germany. They are Heinz-Jakob Neusser, who was head of development for engines and later the entire Volkswagen brand until 2015; Jens Hadler, head of engine development until 2011; Richard Dorenkamp, former head of the engine aftertreatment department until 2013; Bernd Gottweis, a quality and safety supervisor through 2014; and Jürgen Peter, who currently liaises with regulatory agencies in the quality and safety department.

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Under the Clean Air Act, the United States can sentence individuals to two years in prison each for false statements made in submitted documents, “tampering with a monitoring device or method” required under the act (such as VW’s defeat device), and a “knowing failure to notify or report.” More employees may be indicted as the investigation continues.

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“Over the course of a conspiracy that lasted for nearly a decade, they seriously abused those positions,” said Attorney General Loretta Lynch (pictured above), “and today, they are being charged with a range of crimes, including conspiracy to defraud the United States, violations of the Clean Air Act, and wire fraud.”

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The DOJ alleges that Hadler, as head of VW engine development until 2011, authorized staff to develop the emissions-control software “knowing that only the use of the defeat device software would enable VW diesel vehicles to pass U.S. emissions tests.” At some point between 2007 and the debut of the first 2009 model “clean diesels” in the U.S., VW executives realized they would not meet nitrogen-oxide limits without more expensive modifications, and so they conspired to “cheat,” the DOJ said. The defeat device—which detects when the car is being tested to the EPA driving cycle—later caused “increased stress on the exhaust system” starting in 2012. VW then, in 2014, modified the emissions software to run in Street mode instead of Dyno mode on startup, via dealer-supplied updates, the DOJ said.

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“We are determined that Volkswagen will become an example of how a socially responsible company should act and lead in the years ahead,” VW CEO Matthias Müller said in a statement, “and we know that our success can never be divorced from the way we conduct ourselves.”

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