VW says proposed settlement in emissions scandal contains $4.3 billion in fines
German automaker Volkswagen said Tuesday that it was in “advanced talks” with United States authorities over a proposed settlement in its diesel emissions scandal under which the company would pay $4.3 billion in criminal and civil fines.
The draft settlement with the U.S. Department of Justice and U.S. Customs and Border Protection would include the appointment of an independent monitor to oversee the company’s compliance and control measures for three years.
A company statement issued Tuesday said that under the proposal, Volkswagen would agree to “a guilty plea” to criminal law provisions.
The draft would need to be approved by Volkswagen’s boards and by U.S. courts. Volkswagen said its management board of top executives, which includes Chief Executive Matthias Mueller, and its board of directors would deal with the issue “in the very short term,” as soon as Tuesday or Wednesday.
“A final conclusion of the settlement agreement is further subject to the execution by the competent U.S. authorities and to the approval of the competent U.S. courts,” the company said.
The penalties would exceed the amounts Volkswagen has set aside to cover costs from the scandal, but the specific impact on 2016 earnings “cannot be defined at present,” the statement said. Volkswagen already had deducted $19.2 billion from earnings to account for the expected costs of fines, settlements and recalls.
The company has admitted to equipping diesel cars with software that turned up emissions controls when the car was being tested, and turned them down during normal driving, improving engine performance but exceeding emission limits.
Volkswagen has reached a $15-billion civil settlement with environmental authorities and car owners in the U.S. under which it agreed to buy back up to 500,000 vehicles. The company also faces an investor lawsuit and criminal investigation in Germany.
In all, some 11 million vehicles worldwide were equipped with the cheating software.
The scandal was revealed in September 2015, when the U.S. Environmental Protection Agency issued a notice of violation. Then-CEO Martin Winterkorn resigned and was succeeded by Mueller. The company has apologized and brought in U.S. law firm Jones Day to investigate.
Oliver Schmidt, the company’s former head of U.S. environmental compliance, was arrested over the weekend in Florida. Another employee, engineer James Liang, has pleaded guilty in the criminal case.
Volkswagen would not be the first automaker to reach a high-dollar settlement with the U.S. Justice Department. In a 2014 agreement with the department, Toyota agreed to pay a $1.2-billion fine over unintended acceleration problems. Similarly, General Motors agreed in 2015 to pay $900 million to resolve a deadly ignition-switch scandal, striking a deal that avoided criminal charges against individual executives.
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UPDATES:
2 p.m.: This article was updated throughout with details, comments and background information.
This article was originally published at 11:50 a.m.
