On Friday, Volkswagen AG pleaded guilty to fraud, obstruction of justice and falsifying statements. This was part of a $4.3 billion settlement reached with the U.S. Justice Department in January over the automaker’s diesel emissions scandal.
A company spokesman stated that this is the first time the company has pleaded guilty to criminal conduct in any court in the world. The move comes as the car manufacturer aims to put the most expensive auto industry scandal ever behind it.
In September 2015, it was revealed that VW intentionally cheated on emissions tests for at least six years. This disclosure led to the removal of its chief executive, it also damaged its reputation around the world and prompted massive bills.
VW has agreed to spend up to $25 billion in the United States in total, to address claims from owners, environmental regulators, states and dealers and offered to buy back about 500,000 polluting U.S. vehicles.
Manfred Doess, Volkswagen’s general counsel, said at a hearing in U.S. District Court in Detroit that he was authorized by the company’s board of directors to enter a guilty plea. Doess told the court: “Your honor, VW AG is pleading guilty to all three counts because it is guilty on all three counts,”
Sean Cox, U.S. District Judge, accepted the guilty plea to conspiracy to commit fraud, obstruction and entry of goods by false statement charges. He set April 21 as the sentencing date, he will then decide whether to approve the terms of the plea agreement or not.
The news didn’t affect the VW stock much, shares were slightly up in Germany, closing up 0.3 percent at 143.70 euros.
Up to $10 billion will be spent by VW to buy back diesel vehicles emitting up to 40 times legally allowable pollution. In addition to $5,100 per owner in additional compensation.
VW also agreed to massive reforms, under the plea agreement. Which will include new audits and oversight by an independent monitor for three years.
The company has admitted to installing a secret software in 580,000 U.S. vehicles which allowed it to cheat emissions tests over six years, allowing the vehicles to emit up to 40 times the legally allowed level of pollution.
The U.S. Securities and Exchange Commission, Internal Revenue Service and some U.S. states are still investigating the company due to excess emissions. Eric Schneiderman, New York Attorney General, stated without elaboration that there have been recent settlement talks.
Seven current and former VW executives have been charged by the Justice Department with crimes related to the scandal. One executive pleaded guilty and agreed to cooperate while another one is in custody and awaiting trial.
In January, U.S. prosecutors said that five of the seven are believed to be in Germany. They haven’t been arraigned.
A criminal probe into VW’s excess diesel emissions is also ongoing by German prosecutors.
On Monday, Hans Dieter Poetsch, VW Chairman stated that the company will broaden disciplinary action beyond the two dozen employees it has already suspended.
VW agreed to spend nearly $3 billion to balance excess emissions and make $2 billion in investments in zero emission vehicle infrastructure and awareness programs over a decade, as part of its U.S. emission settlements.