Volkswagen pleads guilty in US to felony counts in diesel emissions case

DETROIT/WASHINGTON — Volkswagen AG pleaded guilty on Friday to three felony counts as part of a $4.3 billion settlement reached with the Justice Department in January over the automaker’s massive diesel emissions scandal.

VW general counsel Manfred Doess made the plea on the company’s behalf after he said at a hearing in U.S. District Court in Detroit that he was authorized by the board of directors of VW to enter a guilty plea.

“Your honor, VW AG is pleading guilty to all three counts because it is guilty on all three counts,” Doess told the court.

Friday was the first time the company has pleaded guilty to criminal conduct in any court in the world, a company spokesman said.

VW’s share price in Germany fell just slightly after the expected guilty plea, and then traded little changed at 143.30 euros.

U.S. District Judge Sean Cox accepted the guilty plea to conspiracy to commit fraud, obstruction of justice and entry of goods by false statement charges and set an April 21 sentencing date.

Cox said he was considering a motion made by a lawyer for some owners on whether to allow additional restitution for victims. The Justice Department and VW argue the automaker has already agreed to significant restitution.

“This a very, very, very serious crime. It is incumbent on me to make a considered a decision,” Cox said.

REFORMS

Under the plea agreement, VW agreed to sweeping reforms, new audits and oversight by an independent monitor for three years after admitting to installing secret software in 580,000 U.S. vehicles. The software enabled it to beat emissions tests over a six-year period and emit up to 40 times the legally allowable level of pollution.

An assistant U.S. attorney, John Neal, told the court that the emissions scheme “was a well thought-out, planned offense that went to the top of the organization.” He said VW could have faced $17 billion to $34 billion in fines under sentencing guidelines.

Volkswagen agreed to change the way it operates in the United States and other countries under the settlement. VW, the world’s largest automaker by sales, in January agreed to pay $4.3 billion in U.S. civil and criminal fines.

In total, VW has agreed to spend up to $25 billion in the United States to address claims from owners, environmental regulators, states and dealers and offer to buy back about 500,000 polluting U.S. vehicles.

The German automaker halted sales of diesel vehicles in late 2015 and has said it has no plans to resume sales of new U.S. diesels.

The Justice Department also charged seven current and former VW executives with crimes related to the scandal. One executive is in custody and awaiting trial and another pleaded guilty and agreed to cooperate. Five of the seven are believed to be in Germany and have not been arraigned.

German prosecutors are also investigating.

VW chairman Hans Dieter Poetsch said Monday the company expects to broaden disciplinary action beyond the two dozen employees it has already suspended.

As part of its U.S. emission settlements, VW agreed to spend nearly $3 billion to offset excess emissions and make $2 billion in investments in zero emission vehicle infrastructure and awareness programs over a decade.