VW pleads guilty in diesel scandal, will pay $4.3B in fines, 6 execs indicted

Volkswagen has agreed to plead guilty to three criminal counts related to its use of “defeat device” software in diesel cars to cheat on emissions tests, the Justice Department announced today. VW agreed to pay a $2.8 billion criminal penalty, as well as $1.5 billion in civil penalties for environmental, customs, and financial claims.

A former head of regulator compliance, Oliver Schmidt (pictured above), was arrested in Miami in January on his way back to Germany from a vacation. Now, Automotive News is reporting that Schmidt will plead guilty in the criminal case against VW AG. We are awaiting further details, but don’t expect the U.S. government to go easy on someone so central to the scandal.

Volkswagen was charged with conspiring to defraud the United States government and its customers, and to violate the Clean Air Act, through its use of “defeat device” software. The software detected when a car was being emissions tested, and allowed cars to temporarily produce lower levels of emissions in order to pass the tests. In the real world, some of the affected vehicles produced emissions 35 percent above legal limits.

The automaker is also charged with obstruction of justice for “destroying documents related to the scheme,” according to a Justice Department statement, as well as importing cars into the U.S. using false statements about their compliance with emissions standards. In addition to the $4.3 billion in penalties, VW will be on probation for three years, will be supervised by an independent corporate compliance monitor for at least that amount of time, and has agreed to fully cooperate with the Justice Department’s investigations and prosecution of individuals believed to have been involved in its emissions cheating.

The settlement, which the Justice Department was reportedly eager to reach before the incoming Trump administration replaced political appointees who had been working on the case, does not prevent prosecutors from going after individuals within the company. Six Volkswagen executives were indicted on charges related to the diesel scandal.

Apart from Schmidt, the other five VW executives facing criminal charges include Heniz-Jakob Neusser, who was head of the Volkswagen brand from 2013 until shortly after the diesel scandal broke in September 2015, Jens Hadler, Richard Dorenkamp, Bernd Gottweis, and Jürgen Peter.

Other stipulations of the settlement include a civil penalty of $1.45 billion to U.S. Customs and Border Protection and the Environmental Protection Agency. That is in addition to the $14.7 billion the company already agreed to pay in a separate settlement covering 2.0-liter diesel cars sold with the illegal software, and $1 billion in a settlement for 3.0-liter diesel cars. VW will also pay $50 million for alleged violations of the Financial Institutions Reform, Recovery, and Enforcement Act (FIRREA).

Updated: Added report that VW Executive Oliver Schmidt will plead guilty.