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Six Volkswagen executives indicted in emissions-cheating scandal

Volkswagen AG confirmed on Jan. 10 it has negotiated a $4.3 billion draft settlement with U.S. regulators to resolve its diesel emissions troubles and plans to plead guilty to criminal misconduct. (Reuters)

Federal prosecutors indicted six executives at German automaker Volkswagen on Wednesday in connection with the company’s diesel emissions scandal.

Five of the six executives are thought to be residing in Germany, according to the Department of Justice. Attorney General Loretta Lynch said it was too soon to say how that will impact legal proceedings moving forward. The sixth executive was arrested at an airport in Miami over the weekend as he was trying to leave for Germany.

Additional executives at the company are being investigated and could potentially face charges, Lynch said.

The pursuit of executives by criminal prosecutors is a rare occurrence among big companies, whose top people almost never face jail time. In other recent scandals involving automakers such as GM and Toyota — in which safety defects led to deaths of drivers and passengers — the companies paid big fines but admitted no criminal wrongdoing; and no executive saw the inside of a prison cell.

David Uhlmann, who served as the head of the DOJ’s environmental crimes section from 2000 to 2007, said that the settlement was a textbook case of how the agency should address “egregious wrongdoing by corporations.”

“Too often, justice comes up short in corporate crime prosecution but not in the VW case,” the University of Michigan law professor said.

Officials said Wednesday that the Volkswagen case stood out because the deception lasted 10 years and involved senior managers.

“As you all know we cannot put companies in jail, but we can hold their employees personally accountable and we can force companies to pay hefty fines,” said FBI Deputy Director Andrew McCabe.

Volkswagen agreed Wednesday to plead guilty to three criminal counts and pay $4.3 billion in criminal and civil fines in the settlement.

The six executives face charges of conspiracy to commit fraud, and violation of the U.S. Clean Air Act. Those indicted were Heinz-Jakob Neusser, 56, Jens Hadler, 50, Richard Dorenkamp, 68, Bernd Gottweis, 69, Oliver Schmidt, 48, and Jürgen Peter, 59, all of Germany. Schmidt was arrested and charged earlier this week in Miami.
All of the accused have ties to Volkswagen’s engine development and quality assurance divisions, both in the U.S. and Germany. They directed employees to develop and install technology to evade emissions testing, then falsely marketed the car engines as “clean diesel,” according to the DOJ.

Another former Volkswagen employee, engineer James Liang, plead guilty to fraud charges in September.

A spokesman for Volkswagen declined to disclose the employment status of the six indicted individuals, citing a policy not to discuss ongoing investigations or personnel matters.

Hans Dieter Pötsch, who chairs the company’s supervisory board, said in a statement: “When the diesel matter became public, we promised that we would get to the bottom of it and find out how it happened – comprehensively and objectively. . . . We are no longer the same company we were 16 months ago.”

Volkswagen shed several top executives and implemented other internal changes after the emissions scandal came to light. The company also apologized to U.S. lawmakers and pledged to regain the trust of American consumers. The DOJ said those actions helped the company avoid even steeper penalties.

A judge must now approve the settlement before it’s made official. That court date has not been set, a DOJ spokesman said.

University of Richmond law professor Carl W. Tobias said the Volkswagen settlement sends a message to other companies that illegal conduct can come with harsh penalties. But the remaining aspects of the investigation will now depend on president-elect Donald Trump’s incoming administration.

“Numerous questions remain, such as who else at VW might be prosecuted, whether the five [in Germany] can be brought to justice, whether VW’s behavior will improve, etc.,” Tobias said.

Volkswagen is charged with conspiring to defraud the government and violate environmental regulations from May 2006 to November 2015 by installing devices in its diesel engine vehicles that obscure the amount of nitrogen oxide they spew into the air. Those devices and accompanying software allowed Volkswagen to evade regulators for years, the DOJ asserts.

However, Volkswagen falsely claimed that its vehicles met all environmental regulations in order to import and sell the affected models in the United States from 2009 to 2015, according to the charges. In all, the emissions scandal touched 11 million vehicles worldwide, including more than half a million sold in the United States.

When U.S. officials finally caught on, Volkswagen “did corruptly alter, destroy, mutilate and conceal business records” in order to obstruct the investigation, charging documents declare. A Volkswagen supervisor is accused of deleting emails and files related to the deceptive device and instructing employees to do the same, charging documents show.

Wednesday’s announcement will bring Volkswagen’s total fines to roughly $20 billion. The largest of those penalties was the $14.7 billion the company was ordered to pay to buy back cars and otherwise compensate customers impacted by the scandal.

 

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