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Volkswagen Pays $4.3 Billion to Settle Diesel Emissions Scandal

Automotive giant Volkswagen AG has agreed to pay $4.3 billion in criminal and civil fines for the company's diesel emissions cheating scandal, the Justice Department and automaker announced today.

A federal grand jury in Michigan has also indicted six Volkswagen employees and executives for their alleged roles in the nearly 10-year conspiracy.

The company's settlements with the U.S. Department of Justice, Environmental Protection Agency and U.S. Customs and Border Protection are still subject to federal court approval. As part of the resolution, the German automaker agreed to the appointment of an independent monitor for three years.

Volkswagen pleaded guilty to three criminal felony counts, including "participating in a conspiracy to the defraud the United States and VW's U.S. customers and to violate the Clean Air Act by ... using cheating software to circumvent" the emissions testing process on some VW, Audi and Porsche diesel vehicles, according to the Department of Justice. In addition, VW has been charged with obstruction of justice "for destroying documents related to the scheme, and with a separate crime of importing these cars into the U.S. by means of false statements about the vehicles' compliance with emissions limits," the Department of Justice said.

"Volkswagen deeply regrets the behavior that gave rise to the diesel crisis," CEO Matthias Müller said today in a statement. "Since all of this came to light, we have worked tirelessly to make things right for our affected customers and have already achieved some progress on this path. We will continue to press forward with changes to our way of thinking and working."

The $2.8 billion criminal penalty and $1.5 billion civil penalty bring Volkswagen's total cost to the United States to about $20 billion. The company reached settlements last year of more than $15 billion with consumers, the government and California regulators. That money is intended for buybacks, fixes, owner compensation and environmental remediation.

One of the six indicted employees was taken into custody in Florida on Saturday for his alleged role in the company's suspected "scheme" to cheat emissions standards, according to a criminal complaint unsealed Monday.

Oliver Schmidt, who led the automaker's U.S. environmental regulatory compliance office from 2012 to 2015, allegedly conspired with other VW employees to defraud the federal government -- and American consumers -- by concealing the installation of a device designed to cheat emissions tests.

Two other indicted employees, Richard Dorenkamp and Jens Hadler, allegedly created the device in 2006, after they tried -- and failed -- to design a diesel engine that would meet new U.S. emissions standards and appeal to consumers, according to the Justice Department. They then installed the device into cars marketed as "environmentally friendly," the Justice Department said.

All six defendants are believed to be residents of Germany, according to the Justice Department. Schmidt was arrested during a trip to the United States.

The defeat device software, installed on nearly half a million diesel VW cars sold in the U.S. between 2009 and 2015, could detect when a vehicle was undergoing emissions evaluations and decrease its nitrogen oxide emissions to comply with American standards.

When the software recognized the vehicle was on the road, however, it would allow emissions up to 40 times higher than permitted.

The cheat device was discovered in September 2015 by researchers at West Virginia University.
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