Fri | Aug 18, 2017

Co-operation, payments to owners help VW avoid bigger penalty

Published:Sunday | March 12, 2017 | 3:00 AM
A VW employee enters the Volkswagen factory site through Gate 17 in Wolfsburg, Germany, October 6, 2015.

By cooperating with federal investigators and quickly agreeing to compensate car owners, Volkswagen likely will avoid a massive criminal fine for cheating on diesel emissions tests and trying to cover it up.

The company on Friday pleaded guilty to obstruction of justice and conspiracy over a brazen scheme to program nearly 600,000 vehicles to deceive the Environmental Protection Agency.

VW also agreed to pay US$4.3 billion in criminal and civil penalties. While that is the largest-ever fine imposed by the United States government on an automaker, the company could have been on the hook for much more.

Federal sentencing guidelines called for fines from US$17 billion to US$34 billion 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," Assistant US Attorney John Neal told the court.

VW won't know its punishment for sure until sentenced April 21 by US District Judge Sean Cox in Detroit. But prosecutors said that VW got a big discount on the penalty because it co-operated after fessing up to the crime.

The automaker's general counsel, Manfred Doess, who was in court to agree to the plea, acknowledged 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 co-operation enabled US authorities to quickly file charges against six German supervisors in the case. Only one is in US custody, though, and it's unlikely 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, Neal said. Car owners combined will get up to US$11 billion for vehicle buybacks and compensation as part of a civil settlement agreed to last year. The company also agreed to environmental remediation and electric vehicle investment, and its behaviour will be watched by a monitor for three years.

- AP