Dieselgate: VW Exec Arrested, U.S. Case Almost Settled

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A Volkswagen executive is now facing U.S. fraud charges in the “Dieselgate” affair. Last weekend, FBI agents arrested former regulatory compliance chief Oliver Schmidt with conspiracy to defraud the United States.

The FBI made its move after discovering Schmidt was in the US. They nabbed him while he was at the Miami airport catching a flight to Germany, according a New York Times report.

Investigators say Schmidt gave false technical explanations for high emissions levels discovered during 2014 tests. He reportedly only acknowledged the existence of software “defeat devices” once the scandal became public last September.

As we know, Volkswagen eventually confessed to installing pollution-cheating devices on 11 million vehicles. The software sensed when the 2.0- and 3.0-liter cars were being tested by the EPA and activated pollution systems. It disabled the controls during real-world conditions to give vehicles more performance, however, causing them to emit up to 40 times the legal level of nitrogen oxide. 

The company agreed to settle federal and state lawsuits for $14.7 billion, including $2.7 billion toward an EPA fund to clean up the damaged caused by the polluting cars. As reported below, regulators last week agreed to VW’s plan to fix 70,000 2015-and-later 2.0-liter models, though buyers also can also sell them back to Volkswagen for way above market value.  Although it has not been made public, yours truly believes that as part of the EPA settlement, VW will be forced to move from diesel vehicles to all-electric as more punishment for cheating.

In a July, 2016 press conference, New York state Attorney General Eric Schneiderman said the company only admitted the scam “when they knew the regulators had the goods on them.” To prove the point, he showed an email sent from Oliver Schmidt to a VW spokesperson that read, “Audi’s V6 has exactly the same issue as Volkswagen diesels, but not public yet. They have not been caught.” That, Schneiderman said, shows that, “these actions highlight how stubborn and unrepentant the culture at Volkswagen is that gave rise to the systematic cheating and deception described in this complaint.” 

VW Reaches Preliminary Settlement with U.S. 

In other legal news pertaining to the case, Volkswagen has negotiated a concrete draft of a criminal and civil settlement worth $4.3 billion with the U.S. Justice Department. The automaker said the impact of the agreement on its 2016 financial results cannot yet be defined.

The final conclusion of the settlement is still subject to approval by the carmaker’s management and supervisory boards.  The deal includes a guilty plea by the German company regarding certain U.S. criminal law provisions and a statement of facts on the basis of which the fines have to be made, VW said.

The deal comes as the automaker seeks to move past its emissions cheating scandal.

Analysts welcomed that a settlement looked set to be reached before President-elect Donald Trump takes office on Jan. 20, saying it would mark a milestone in VW’s efforts to overcome its biggest-ever corporate scandal.

As part of a settlement, VW would agree to significant reforms and face oversight by an independent monitor, Reuters reported.

VW has repeatedly said no current or former board members were involved in the cheating and that it did not release information sooner because it expected to reach a negotiated settlement with U.S. regulators.

Meanwhile, some of VW’s top executives may find it risky to leave Germany as U.S. prosecutors prepare to charge more company officials

Photo Copyright: Shutterstock/Taina Sohlman
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