Volkswagen will plead guilty for criminal misconduct linked to rigging U.S. diesel emissions tests, admitting that 40 employees at both its Volkswagen and Audi brands deleted documents related to the testing and nearly 11 million vehicles around the world could have defeat device software installed designed to circumvent testing.
Volkswagen will plead guilty for criminal misconduct linked to rigging U.S. diesel emissions tests, admitting that 40 employees at both its Volkswagen and Audi brands deleted documents related to the testing and nearly 11 million vehicles around the world could have defeat device software installed designed to circumvent testing. The company has confirmed that it will negotiate a $4.3 billion draft settlement with regulators, as well as pay California $153.8 million. The hefty fine along with years of repercussions will total well above Volkswagen’s $19.2 billion in reserves to cover such a problem. It will also be subject to monitoring by a third party for the next three years to eliminate further misconduct and shady dealings.
The German car maker is in the middle of a related investigation calling into question executive bonuses issued to six current and former managers after its admission to criminal activity, five of whom are from Germany. None of the suspects in question, though top tier, were part of Volkswagen’s management board. One of those named in the emissions scandal was Heinz-Jakob Neusser, former head of development for the Volkswagon Brand and head of engine development, who was suspended in 2015. Richard Dorenkamp and Jens Hadler, other former heads of engine development, were also indicted, as were Audi R&D Chief Ulrich Hackenberg and Porsche R&D Chief Wolfgang Hatz. The absence of the company’s prominent engineers left head hunters in a pickle, needing to quickly fill their seats to keep operations afloat.
The emissions indictment cited that the executives had been participating in a ten year conspiracy to cheat the tests, covering up harmful emissions after realizing Volkswagen could not comply with the strict U.S. Justice Department’s regulations. U.S. Attorney General Loretta E. Lynch said authorities would continue to pursue individual investigations of anyone suspected in the diesel scandal. More executives may be named in the coming weeks. It is still unclear whether Germany will allow those native to the country to be extradited to the U.S. or if they will be tried overseas.
Volkswagen is expected to submit its plea deal as early as Wednesday of next week, and it will need to be signed of by a U.S. judge in order to take effect. Swift execution of the deal was made possible due to the car maker’s attempts to get a plan into place before the country’s change in presidency. Having the diesel deal submitted after Obama’s departure would have delayed the process by several months. Volkswagen’s 2016 financial results are expected to be released in mid-March, and shares rose this week to their highest level since September of last year following the suspected execution of the plea deal, although they remain lower than they were prior to the conspiracy. Volkswagen is still subject to lawsuits from nearly 20 U.S. states as well as numerous individual investors, and will be forced into spending many years undoing the damage caused by almost 600,000 polluting vehicles currently on the streets. Chief Executive Officer Matthias Mueller submitted a statement vowing to make continual changes and improvements to how the company operates.