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Home Business Judge sentences Volkswagen to $2.8B criminal fine for emissions cheating

Judge sentences Volkswagen to $2.8B criminal fine for emissions cheating

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Brent Snavely, Detroit Free Press

Published 10:56 a.m. ET April 21, 2017 | Updated 3 hours ago

DETROIT — Volkswagen must pay a $2.8 billion criminal fine for purposely building a diesel engine equipped with software to cheat on greenhouse gas emissions tests.

U.S. District Judge Sean Cox on Friday accepted a plea agreement reached in January between the automaker and the federal government.

Cox said the $2.8 billion criminal penalty is large enough, even though Volkwagen’s offenses, spanning a decade, were done on purpose.

“This is a case of deliberate massive fraud perpetrated by VW management,” Cox said today. “This case also involves a failure of the VW supervisory board, which is government, labor and shareholders.”

The $2.8 billion fine is part of a larger $4.3 billion settlement reached in January between Volkswagen and the the U.S. Justice Department.  By imposing the fine, and accepting Volkswagen’s agreement to be overseen by a federal monitor, the judge also accepted the deal between the government and the company.

Lawyers for the U.S. Department of Justice had argued a month ago that the $4.3 billion settlement was adequate even though it was only a fraction of penalty that U.S. law allowed, which would have ranged from $17 billion to $34 billion.

U.S. Attorney John Neal argued in March that the lower figure was a punishment that fit the crime because Volkswagen went to great lengths to cooperate with the government and move the investigation along swiftly after the U.S. Environmental Protection Agency charged the automaker with wrongdoing in September 2015.

Volkswagen also has agreed to civil settlements worth about $17 billion for U.S. consumers and dealers who own the automaker’s diesel vehicles.

However, the automaker also spent months trying to conceal the device even after the California Air Resources Board began asking questions. In a span of several weeks, about 40 employees at Volkswagen and Audi destroyed thousands of emails and documents in the days before the company admitted wrong doing to regulators, according to the forthcoming book Faster, Higher, Farther, by Jack Ewing.

Cox initially said the government’s agreement might not be enough.

On Friday, Cox noted that consumers and low-level employees are those that were hurt the most by Volkswagen’s actions. Even so, Cox overruled several objections to the plea agreement that would have allowed individuals to seek criminal restitution from the courts. Cox said individual owners of the affected cars are able to pursue repairs or reimbursements through a separate multi-billion civil settlement Volkswagen has already agreed to.

“This corporate greed, this failure of management…has cost VW billions and billions of dollars,” Cox said. “The individuals who will be hurt the most are the working men and women at VW,” who likely will not get bonuses or raises because of the financial burden caused by actions of higher ranking company officials.”

Before Cox imposed his sentence Manfred Doess, the automaker’s general counsel, again appeared on behalf of the world’s largest automaker to apologize and vowed that the company’s corporate culture is changing.

“This conduct was not consistent with the values of this company and plain and simple it was wrong. We let people down and for that we are deeply sorry,” Doess said. “Volkswagen today is not the same company that it was 18 months ago,” he said.

Follow Detroit Free Press reporter Brent Snavely on Twitter @BrentSnavely.

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