Volkswagen Fined $2.8B In Emissions Cheating Scandal

DETROIT, MI — Volkswagen will pay a fine of $2.8 billion for its massive emissions cheating scandal under a sentence handed down by U.S. District Judge Sean Cox in federal court in Detroit Friday. Cox also put the German automaker on probation for three years.

Cox delayed sentencing last month after Volkswagen, the world’s largest automaker, pleaded guilty to rigging software in some of its diesel engine cars so they would pass tougher emissions standards adopted in 2007 and deceiving federal regulators for about 10 years.

In the March plea hearing, Volkswagen admitted that it installed so-called defeat devices in about 600,000 vehicles that tricked emissions testers into believing the cars performed below U.S. Environmental Protection Agency standards, when in fact they belched carbon dioxide at a rate that was 40 times higher. VW pleaded guilty to conspiring to defraud the United States by violating the Clean Air Act and obstructing justice during a government investigation of the scandal.

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After accepting Volkswagen’s guilty plea last month, Cox said Volkswagen committed a “very, very serious offense” and that “it is incumbent on me to make a considered decision.”

In January, the Justice Department and Volkswagen reached a $4.3 billion settlement agreement, which VW lawyers argued was punishment enough. Cox had said in March that it might not be high enough, but the fine imposed Friday is well below the amount agreed to by the government and VW.

He could have fined Volkswagen between $17 billion and $34 billion under federal guidelines, but because the automaker admitted the conspiracy and agreed to oversight by an independent monitor for three years, Assistant U.S. Attorney John Neal recommended the $2.8 billion fine and Cox agreed it was adequate,The Detroit News reported.

“This is a case of deliberate, massive fraud perpetrated by VW management,” Cox said, according to a Detroit Free Press report. “This case also involves a failure of the VW supervisory board, which is government, labor and shareholders.”

The automaker has agreed to pay about $17 billion to settle civil lawsuits with U.S. consumers who bought the dirty cars. Cox’s sentencing order did not include restitution for the car owners.

“This corporate greed, this failure of management … has cost VW billions and billions of dollars,” Cox said. “The individuals who will be hurt the most are the working men and women at VW.”

They likely will be denied bonuses and raises because of VW executives’ actions, he said.

Photo by Gábor Kovács via Flickr Commons