VW to plead guilty, pay $4.3B in deal with Justice Department over diesel scandal

The Volkswagen Group appears to be nearing the end of its diesel emissions scandal in the United States, at least as far as regulators are concerned.

Having already reached settlements with EPA officials and customers regarding its 2.0-liter and 3.0-liter diesel engines, which in 2015 were found to be fitted with “defeat device” software used to hide their true emissions levels from regulators, the German automaker is now close to reaching a settlement with the Justice Department and Customs and Border Protection regarding criminal misconduct tied with the scandal.

On Tuesday, VW confirmed a settlement with the aforementioned authorities which contains criminal and civil fines totaling $4.3 billion. The settlement also includes measures to strengthen VW’s compliance process including the appointment of an independent monitor for the next three years.

Part of the settlement agreement is a guilty plea regarding certain criminal charges. This is in contrast to the deferred prosecution agreements made by the Justice Department with General Motors Company [NYSE:GM] in 2015 over the automaker’s defective ignition switches linked to 124 deaths, as well as in 2014 to Toyota which had concealed information about sudden acceleration cases. GM ended up paying $900 million while Toyota paid $1.2 billion.

The latest settlement will still need to be approved by a judge.

Volkswagen TDI 'clean diesel' television ad screencap

Volkswagen TDI ‘clean diesel’ television ad screencap

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In a statement, VW said that the additional cost of the agreement will take it above the 18.2 billion euros (approximately $19.2 billion) it has set aside to handle the scandal.

In related news, one VW executive has been arrested by the FBI over the scandal. That executive is Oliver Schmidt, who was arrested on Saturday while on vacation in Miami and been charged with defrauding the U.S., wire fraud, and violating the Clean Air Act.

Former VW engineer James Liang pled guilty last fall to violating the Clean Air Act and conspiracy to defraud the U.S. government. But Schmidt’s arrest marks the first time that a VW executive has been charged with criminal behavior in connection with the scandal.

According to the filed complaint, which you can read here, Schmidt was aware of the defeat device well before the scandal became public and even briefed more senior VW executives that the automaker could face criminal charges. Those senior executives, who weren’t named, decided not to disclose the defeat device, the complaint states.

Crucially, the accusations in the complaint run counter to VW’s stated timeline for its senior executives’ knowledge of the scandal. The automaker in court documents has maintained that senior executives did not learn of the wrongdoing until early September 2015, when the scandal went public.

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