VW says it negotiated $4.3 billion U.S. criminal settlement

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VW says it negotiated $4.3 billion U.S. criminal settlement

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BERLIN — Volkswagen has negotiated a concrete draft of a criminal and civil settlement worth $4.3 billion with the U.S. Justice Department and said the impact of the accord on its 2016 financial results cannot yet be defined.

Volkswagen said final conclusion of the settlement is still subject to approval by the carmaker’s management and supervisory boards, adding the two bodies will address the matter still late on Tuesday or on Wednesday.

The settlement includes a guilty plea by the German company regarding certain U.S. criminal law provisions and a statement of facts on the basis of which the fines have to be made, VW said.

The deal comes as the automaker seeks to move past its emissions cheating scandal.

Analysts welcomed that a settlement looked set to be reached before President-elect Donald Trump takes office on Jan. 20, saying it would mark a milestone in VW’s efforts to overcome its biggest-ever corporate scandal.

“There is apprehension in the market that Trump may become an unpredictable president and turn against non-U.S. companies,” said Bankhaus Metzler analyst Juergen Pieper. “The deal is not cheap but it gives clarity to investors and relief to VW.”

As part of a settlement, VW would agree to significant reforms and face oversight by an independent monitor, Reuters reported earlier Tuesday.

The deal with the Justice Department comes as the carmaker aims to rebuild its long-struggling business in the U.S., where the decline in VW brand sales last year accelerated to 8 percent.

Europe’s largest automaker is striving to revive its fortunes in the wake of the scandal by developing a new modular platform for mass producing electric cars and by embracing automated driving to become a leader in green transport by 2025.

VW admitted in September 2015 to installing secret software in hundreds of thousands of U.S. diesel cars to cheat exhaust emissions tests and make them appear cleaner than they were on the road, and that as many as 11 million vehicles could have similar software installed worldwide.

It’s still not clear where criminal investigations into the responsibility of individual managers will end.

In Germany, state prosecutors are investigating whether former CEO Martin Winterkorn misled investors by withholding information about the scale of its problems with U.S. regulators. Prosecutors are also investigating the roles of chairman Hans Dieter Poetsch, previously finance chief, and VW brand head Herbert Diess.

VW has repeatedly said no current or former board members were involved in the cheating and that it did not release information sooner because it expected to reach a negotiated settlement with U.S. regulators.

The company has agreed to spend up to $17.5 billion in the U.S. to resolve claims by U.S. regulators, owners and dealers and offered to buy back nearly 500,000 polluting vehicles.

VW would face major financial difficulties if the European Commission, governments and consumer groups were to succeed in pushing VW to grant redress to owners of affected diesel cars similar to that agreed in the U.S., said Pieper.

Staying in Germany

Meanwhile, some of VW’s top executives may find it risky to leave Germany as U.S. prosecutors prepare to charge more company officials.

Oliver Schmidt, a VW executive, was arrested in Miami this past weekend as he was returning to Germany from vacation and faces charges of misleading regulators about the automaker’s diesel-emissions cheating devices. Prosecutors are preparing to charge more high-level German-based executives in the case, a person familiar with the matter said.

Schmidt’s arrest caught many VW executives by surprise, including some attending this week’s Detroit auto show, according to another person. Lawyers for some senior executives in Germany have already warned their clients not to leave the country, according to a third person.

The arrest and the looming charges against senior executives show that the year-long investigation into the emissions cheating is coming to a head in the final days of the Obama administration. A multibillion-dollar settlement between the carmaker and the Justice Department will probably come this week, people familiar with the matter have said. VW admitted last year that about 11 million diesel cars worldwide were outfitted with so-called defeat devices, embedded algorithms used to game emissions tests.

Schmidt, 48, who was VW’s liaison with U.S. environmental regulators, appeared in federal court in Miami Monday, where a judge ordered him held in custody as a flight risk. His lawyer sought Schmidt’s release, saying his client had alerted the government he was visiting and was willing to speak with investigators and face charges.

Prosecution map

The court filing against Schmidt lays out what could be a road map to charges against higher-level executives.

Volkswagen’s senior officials in Wolfsburg, Germany, were told in July 2015 of the existence, purpose and characteristics of the device that lowered emissions on diesel cars when undergoing environmental testing, the U.S. alleged, citing information obtained from three cooperators. VW admitted its efforts to skirt environmental standards in September 2015.

 

read more at autonews.com

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