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January 11, 2017 12:00 AM

Six VW employees indicted by U.S. as automaker agrees to $4.3B diesel settlement

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    Reuters
    EPA Administrator Gina McCarthy speaks during a news conference in Washington, accompanied by U.S. Attorney General Loretta Lynch, right, and several other top U.S. law enforcement officials.

    WASHINGTON -- The United States Department of Justice said six high-ranking Volkswagen employees had been indicted in connection with a conspiracy to cheat emissions tests.

    The indictments were announced on Wednesday as the D.o.J. gave details of a broader settlement between the carmaker and U.S. authorities.

    The individuals are former VW brand head of powertrain development Heinz-Jakob Neusser; former VW head of engine development Jens Hadler; Richard Dorenkamp, who led a team of engineers that developed the first diesel engine designed to meet new U.S. emissions standards; former VW quality manager Bernd Gottweis; former Michigan environment and engineering office manager Oliver Schmidt; and quality manager Juergen Peter.

    The six held "positions of significant responsibility at VW, including overseeing the company's engine development division and serving on the company's management board," U.S. Attorney General Loretta Lynch said, declining to say if any higher level executives could face charges. "Over the course of a conspiracy that lasted for nearly a decade, they seriously abused those positions."

    VW pleaded guilty to emissions-cheating scandal and agreed to pay $4.3 billion in criminal and civil charges. According to documents filed in U.S. District Court in Detroit, VW will pay a $1.5-billion civil fine and $2.8-billion criminal fine.

    The automaker would have faced higher fines if it hadn't agreed to spend an estimated $11 billion to address consumer vehicles. The VW plea agreement says the automaker could have been fined as much as $34.1 billion for its criminal conduct.

    After the company pleads guilty to the three-count felony criminal information - conspiracy to commit fraud, obstruction of justice and entry of goods by false statement - it will be formally sentenced.

    Further charges possible

    "This announcement does not mean that our investigation is complete... We will continue to pursue the individuals responsible for orchestrating this damaging conspiracy," U.S. attorney general Loretta E. Lynch said at a press conference in Washington DC.

    She declined to comment on any specific individuals. "But I will stress that we are looking at individuals who were involved and would have had knowledge of the same information that's currently being charged," she said.

    The executives indicted live in Germany. Schmidt was arrested in Florida on his way back to Germany after a vacation over the weekend and charged on Monday. It is unclear if the other five will come to the United States to face charges. Germany doesn't extradite its nationals to the U.S. and Lynch said at a press conference in Washington on Wednesday that it's "too early" to say how it would handle prosecutions for individuals there.

    Neusser was head of engine development and a member of the VW brand's management board. Lawyers for him and Dorenkamp didn't immediate respond to requests for comment. Representatives for the other men couldn’t immediately be reached.

    A total of seven VW managers have been charged so far, with U.S.-based engineer James Liang pleading guilty in September and cooperating in the probe.

    VW admitted that six unnamed supervisors between 2006 and 2016 agreed to mislead regulators and customers about the standards. The Justice Department said VW officials told engineers in 2012 to destroy a document that detailed the cheating and that lawyers prodded employees to destroy documents.

    VW will face oversight by an independent monitor for three years and has agreed to make significant reforms. The company agreed to fire six employees, suspend eight and discipline three who participated in diesel misconduct. The agreement still must be approved by U.S. District Judge Sean Cox in Detroit.

    'Deep regret'

    "Volkswagen deeply regrets the behavior that gave rise to the diesel crisis," VW Group CEO Matthias Mueller said in a statement. "We will continue to press forward with changes to our way of thinking and working."

    Click here for the DOJ press release and other documents.

    Court filings detail a scheme in which the automaker deceived regulators and customers for years, and dozens of employees destroyed documents, even after the scandal broke in September 2015.

    VW admitted in September 2015 to installing secret software in hundreds of thousands of U.S. diesel cars to cheat exhaust emissions tests and make them appear cleaner than they were on the road, and that as many as 11 million vehicles could have similar software installed worldwide.

    In 2014, as U.S. suspicions increased about the real level of emissions from VW diesel cars, engineers and supervisors plotted ways to hide the defeat device, according to court documents. The next year, when regulators threatened not to certify 2016 models for sale in the U.S., Volkswagen's senior officials in Wolfsburg, Germany, were told at a July 27 meeting about the deception.

    Senior VW managers approved a plan in August 2015 for what the automaker's employees would say in an upcoming meeting with California regulators, prosecutors allege. That plan called for Volkswagen employees to continue concealing the existence of the emissions device.

    The settlement pushes the cost of the scandal to more than $23 billion in the U.S. and Canada and will force the company to increase the money set aside to pay fines and compensate affected customers, which currently totals 18.2 billion euros ($19.1 billion).

    VW, which plans to post a provision in the fourth quarter of 2016, has the resources to absorb the costs. The company had net liquidity of $32.6 billion in the automotive division at the end of the third quarter, and extended a $21 billion bridge loan facility through mid-2017 to provide an additional financial cushion and protect its credit rating.

    Reuters and Bloomberg contributed to this report

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