Six high-level Volkswagen employees from Germany were indicted in the U.S. on Wednesday in the VW emissions-cheating scandal, while the automaker itself agreed to plead guilty to criminal charges and pay $4.3 billion US — by far the biggest fine ever levied by the government against an automaker.
In announcing the charges and the plea bargain, Justice Department prosecutors detailed a large and elaborate scheme inside VW to commit fraud and then cover it up, with at least 40 employees allegedly involved in destroying evidence.
“Volkswagen obfuscated, they denied and they ultimately lied,” said U.S. Attorney General Loretta Lynch.
VW installed software in diesel engines on nearly 600,000 VW, Porsche and Audi vehicles in the U.S. that activated pollution controls during government tests and switched them off in real-world driving. The software allowed the cars to spew harmful nitrogen oxide at up to 40 times above the legal limit.
U.S. regulators confronted VW about the software after university researchers discovered differences in testing and real-world emissions. Volkswagen at first denied the use of the so-called defeat device but finally admitted it in September of 2015.
Even after that admission, prosecutors said, company employees were busy deleting computer files and other evidence.
The fine easily eclipses the $1.2 billion penalty levied against Toyota in 2014 over unintended acceleration in its cars.
The German company pleaded guilty to conspiracy, obstruction of justice and importing vehicles by using false statements. Under the agreement, VW must co-operate in the continuing investigation, which could lead to the arrest of more employees.
The automaker also agreed to the appointment of an independent monitor to oversee its compliance for three years.
Criminal penalty after massive civil settlement
Volkswagen previously reached a $15 billion civil settlement with environmental authorities and car owners in the U.S. under which it agreed to repair or buy back up to a half-million of the affected vehicles.
The six supervisors indicted by a federal grand jury in Detroit were accused of lying to environmental regulators or destroying computer files containing evidence.
All six are German citizens. Five remained in Germany and were not immediately taken into custody. The only one under arrest was Oliver Schmidt, who was seized over the weekend in Miami during a visit to the U.S.
Schmidt was in charge of VW’s compliance with U.S. environmental regulations. Those indicted also included two former chiefs of Volkswagen engine development and the former head of quality management and product safety.
All six were charged with conspiracy to defraud the U.S. by making false statements to regulators and the public. Three were also charged with fraud and clean-air violations.
Government documents say one engine development supervisor asked an assistant to search another supervisor’s office for a hard drive that contained emails between them. Then another assistant was asked to throw it away, prosecutors said.
According to the plea agreement, Volkswagen officials began deceiving the Environmental Protection Agency and other regulators starting in 2006, when they realized new diesel engines wouldn’t meet 2007 emissions standards.
Under the direction of supervisors, VW employees borrowed the defeat device idea from VW’s Audi luxury division, which was developing different engines with similar software.
In November 2006, some employees raised objections to the defeat device to the head of VW-brand engine development, prosecutors said. That official allegedly directed the employees to continue and warned them “not to get caught.”
In 2014, VW employees learned about a West Virginia University study that identified emissions discrepancies in VWs. Three of the supervisors and other employees decided not to disclose the defeat device to U.S. regulators, prosecutors said.
In August 2015, a VW employee ignored instructions from supervisors and told U.S. regulators about the device.
VW also faces an investor lawsuit and criminal probe in Germany. In all, some 11 million vehicles worldwide were equipped with the software.