Volkswagen To Pay $4.3 Billion To Settle Diesel Scandal, Will Plead Guilty To Criminal Charges
Confirming recent leaks, Volkswagen - whose former head of US regulatory compliance was arrested on Saturday - said it was in "advanced discussions" with US authorities to resolve charges related to its diesel emissions scandal, and has negotiated a “concrete draft of a settlement” that would see it pay $4.3 billion in criminal and civil penalties, and would require the German carmaker to enter a guilty plea to various criminal charges, strengthen compliance systems and install an independent monitor for three years.
The agreement, which has yet to be finalized, would lead to an expense that exceeds current provisions, the German automaker said. It also includes a guilty plea to some criminal charges, the Wolfsburg, Germany-based automaker said:
In case of a settlement agreement, the payment obligations are expected to lead to a financial expense that exceeds the current provisions. The concrete impact regarding the annual result 2016 cannot be defined at present due to its dependency on various further factors.
According to Bloomberg, VW’s management and supervisory boards are scheduled to review the settlement today or Wednesday and may raise provisions related to the scandal, which currently total €18.2 billion ($19.2 billion). A final agreement also needs to be approved by U.S. courts. The U.S. Justice Department declined to comment on Volkswagen’s statement.
VW, which admitted in September 2015 to installing software in its diesel cars to cheat emissions tests, is eager to resolve potential criminal charges before federal prosecutors overseeing the settlement talks leave with the Obama administration later this month the FT added.
Porsche, which owns 30.8% of Volkswagen, said its financial performance will be hurt by the settlement:
The concrete implications on the result of the Porsche SE group for the fiscal year 2016 can only be reliably assessed once Volkswagen group has conclusively evaluated the financial liabilities resulting from this settlement. At this point in time it cannot be ruled out that the Porsche SE group result after tax may fall below the previously communicated corridor between Euro 1.4 bn. and Euro 2.4 bn.
Finalizing the settlement would mark a key milestone in Volkswagen’s effort to emerge from the scandal that erupted in September 2015 after U.S. authorities uncovered the carmaker’s efforts to deliberately cheat on emissions tests on diesel vehicles. The rigged engines were ultimately installed in 11 million vehicles worldwide, and cost former Chief Executive Officer Martin Winterkorn his job.