U.S. Weighs Criminal Charges in VW Emissions Case
August 15 2016 - 4:40PM
Dow Jones News
U.S. Justice Department investigators found evidence of criminal
wrongdoing in Volkswagen AG's diesel-emissions cheating, and are
negotiating a settlement with the German auto maker expected to
result in charges and significant financial penalties, said people
familiar with the matter.
Federal prosecutors and Volkswagen lawyers have held preliminary
discussions and are working to settle an anticipated criminal case
before the end of the year, though the timing may slip, the people
said.
Prosecutors haven't yet decided on specific criminal charges
they might bring against Volkswagen, the people said. Volkswagen
last year admitted to misleading environmental regulators and
consumers. Prosecutors have previously charged other car makers
with wire fraud and concealing information from government
officials for safety transgressions.
Volkswagen, which last year admitted to installing illegal
emissions-cheating software on nearly 600,000 diesel-powered
vehicles in the U.S., is expected to face a large financial penalty
as part of the criminal case, though the exact amount remains under
discussion, the people said. The discussions so far have focused on
a figure that would combine criminal and civil penalties, they
said.
Prosecutors from the U.S. attorney's office in Detroit and the
Justice Department's fraud and environmental crimes sections in
Washington are still weighing whether to seek a guilty plea from
Volkswagen or pursue a so-called deferred prosecution agreement
under which the government would aim to later dismiss charges so
long as the auto maker adheres to settlement terms, the people
said. Over the past two years, Toyota Motor Corp. and General
Motors Co. reached deferred prosecution agreements with the Justice
Department related to safety lapses. Both companies expressed
regret for those lapses and pledged reforms.
Volkswagen, the world's second largest car maker by sales last
year, is expected to receive credit from prosecutors for
cooperating with their probe and agreeing to a civil accord in June
with regulators and consumers that could separately cost the auto
maker up to $15 billion, the people said.
That credit could reduce any financial penalty, among other
terms, in Volkswagen's final Justice Department settlement, they
said. Prosecutors as recently as last week told Volkswagen they
viewed the earlier settlement as a positive step, one of the people
said. The earlier settlement left open future civil penalties and
criminal liability for Volkswagen's conduct.
The amount of any Justice Department financial penalty against
Volkswagen is still being negotiated, these people said, but it
could exceed the $1.2 billion Toyota suffered last year for
concealing unintended acceleration problems, a record for an auto
maker.
Volkswagen set aside roughly $21 billion to deal with fallout
from using defeat-device software that duped government emissions
tests and allowed vehicles to breach legal pollution limits on the
road, the company has said. The Environmental Protection Agency
disclosed the cheating last September, leading to the resignation
of Volkswagen's chief executive and sparking litigation,
investigations and fines across the globe.
It remains unclear whether U.S. prosecutors plan to criminally
charge Volkswagen employees, many of whom reside in Germany and
would need to be extradited to face prosecution, some of the people
said. Deputy Attorney General Sally Yates in June said the U.S.
criminal probe involved "multiple individuals."
Volkswagen's civil settlement affected 475,000 diesel-powered
vehicles with two-liter engines containing software allowing cars
to appear clean during government tests but emit nitrogen oxides
far above allowable standards on the road.
Volkswagen agreed to pay up to $10 billion to repurchase cars
from consumers, and devote another $4.7 billion to environmental
remediation and investments in zero-emission vehicles such as
electric cars as part of the June settlement.
Volkswagen is still negotiating a separate civil settlement
stemming from 85,000 vehicles with three-liter diesel engines that
feature illegal emissions software. Volkswagen is hoping to avoid
repurchasing those vehicles since they are easier to fix and make
compliant with emissions regulations than those with two-liter
engines, one of the people said.
Dealers, meanwhile, remain saddled with affected vehicles they
can't sell. The company's U.S. sales have fallen for nine
consecutive months. Other litigation and investigations in Europe
and Asia loom.
U.S. investigators are reviewing some 1.5 million documents as
part of the Volkswagen criminal probe, Ms. Yates has said.
Volkswagen in April said it would delay releasing preliminary
findings of an investigation it ordered by law firm Jones Day amid
concerns doing so could taint Justice Department interviews of the
company's employees, who might seek to align statements with the
investigation's conclusions.
Volkswagen in April said a "detailed statement of facts" on the
emissions-cheating scandal is expected to be made public in the
U.S., a common practice in criminal settlements, should the company
and Justice Department reach a deal.
Write to Mike Spector at mike.spector@wsj.com and Aruna
Viswanatha at Aruna.Viswanatha@wsj.com
(END) Dow Jones Newswires
August 15, 2016 16:25 ET (20:25 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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