New Opel Insignia to offer torque-vectoring all-wheel drive with Twinster system
BYD the recommended company for Argentinian tender for 50 electric buses

Volkswagen AG agrees to plead guilty and pay $4.3B in criminal and civil penalties; 6 execs and employees indicted

Volkswagen AG has agreed with the US government to resolve criminal and federal environmental and other civil claims against the company relating to the diesel emissions cheating débâcle. As part of the resolution, Volkswagen has agreed to plead guilty to three criminal felony counts, to pay penalties and fines totaling $4.3 billion, and to a series of measures to further strengthen its compliance and control systems, including the appointment of an independent monitor for a period of three years.

In addition, a federal grand jury in the Eastern District of Michigan returned an indictment charging six VW executives and employees for their roles in the nearly 10-year conspiracy.

The resolution comprises four settlements, including a plea agreement with the US Department of Justice (DOJ). The plea agreement is accompanied by a published Statement of Facts that lays out the findings and facts established as to the origins and evolution of the misconduct in the diesel matter.

Volkswagen cooperated with the DOJ’s investigation. The Supervisory Board directed the law firm Jones Day to share all findings of its independent investigation of the diesel matter with the DOJ. The Statement of Facts draws upon Jones Day’s work, as well as on evidence developed by the DOJ.

Terms of the US Resolution. As part of its plea agreement with the DOJ, Volkswagen AG has agreed to plead guilty to three felony counts under US law:

  • Participating in a conspiracy to defraud the United States and VW’s US customers and to violate the Clean Air Act by lying and misleading the EPA and US customers about whether certain VW, Audi and Porsche branded diesel vehicles complied with US emissions standards;

  • Using cheating software to circumvent the US testing process and concealing material facts about its cheating from US regulators and obstruction of justice for destroying documents related to the scheme;

  • Importing these cars into the US by means of false statements about the vehicles’ compliance with emissions limits.

The plea agreement, which is subject to US federal court approval, provides for payment of a criminal fine of $2.8 billion, a period of probation for three years, and the appointment of an independent monitor for a period of three years. The monitor will assess, oversee and monitor the company’s compliance with the terms of the resolution, including measures to further strengthen Volkswagen’s compliance, reporting and monitoring mechanisms and implementation of an enhanced ethics program.

Volkswagen has further agreed to pay a combined penalty of $1.45 billion to resolve US. federal environmental and customs-related civil claims. Separately, Volkswagen has agreed to pay a civil penalty of $50 million to the Civil Division of the DOJ to settle potential claims asserted under the Financial Institutions Reform, Recovery and Enforcement Act (FIRREA). Volkswagen specifically denies any liability and expressly disputes these claims, which it is settling to avoid the uncertainty and expense of protracted litigation.

By their terms, the agreements announced today resolve Volkswagen’s liability under US law and are not intended to address Volkswagen’s liability, if any, under the laws or regulations of any jurisdiction outside the United States. Volkswagen continues to cooperate with investigations by the DOJ into the conduct of individuals and with inquiries by the Braunschweig and Munich public prosecutor’s offices in Germany. In order not to prejudice or otherwise impede ongoing investigations, the company will not make any further comment on the Statement of Facts or findings of the work of Jones Day.

Indictment. Heinz-Jakob Neusser; Jens Hadle; Richard Dorenkamp; Bernd Gottweis; Oliver Schmidt; and Jürgen Peter, all of Germany, are charged with one count of conspiracy to defraud the United States, defraud VW’s US customers and violate the Clean Air Act by making false representations to regulators and the public about the ability of VW’s supposedly “clean diesel” vehicles to comply with US emissions requirements.

The indictment also charges Dorenkamp, Neusser, Schmidt and Peter with Clean Air Act violations and charges Neusser, Gottweis, Schmidt and Peter with wire fraud counts. This case has been assigned to US District Judge Sean F. Cox of the Eastern District of Michigan.

Schmidt was arrested on 7 Jan. 2017, in Miami during a visit to the United States and appeared in federal court there on Monday. The other defendants are believed to presently reside in Germany.

According to the indictment, the individuals occupied the following positions within the company:

  • Heinz-Jakob Neusser: from July 2013 until September 2015, Neusser worked for VW as head of Development for VW Brand and was also on the management board for VW Brand. From October 2011 until July 2013, Neusser served as the head of Engine Development for VW.

  • Jens Hadler: from May 2007 until March 2011, Hadler worked for VW as head of Engine Development for VW.

  • Richard Dorenkamp: from 2003 until December 2013, Dorenkamp worked for VW as the head of VW’s Engine Development After-Treatment Department in Wolfsburg, Germany. From 2006 until 2013, Dorenkamp led a team of engineers that developed the first diesel engine that was designed to meet the new, tougher emissions standards in the United States.

  • Bernd Gottweis: from 2007 until October 2014, Gottweis worked for VW as a supervisor with responsibility for Quality Management and Product Safety.

  • Oliver Schmidt: from 2012 through February 2015, Schmidt was the General Manager in charge of the Environment and Engineering Office, located in Auburn Hills, Michigan. From February 2015 through September 2015, Schmidt returned to VW headquarters to work directly for Neusser, including on emissions issues.

  • Jürgen Peter: Peter worked in the VW Quality Management and Product Safety Group from 1990 until the present. From March 2015 until July 2015, Peter was one of the VW liaisons between the regulatory agencies and VW.

According to the charging documents and statement of facts filed with the court, in 2006, VW engineers began to design a new diesel engine to meet stricter US emissions standards that would take effect by model year 2007. This new engine would be the cornerstone of a new project to sell diesel vehicles in the United States that would be marketed to buyers as “clean diesel,” a project that was an important strategic goal for VW’s management. When the co-conspirators realized that they could not design a diesel engine that would both meet the stricter NOx emissions standards and attract sufficient customer demand in the US market, they decided they would use a software function to cheat standard US emissions tests.

VW engineers working under Dorenkamp and Hadler designed and implemented software to recognize whether a vehicle was undergoing standard US emissions testing on a dynamometer or it was being driven on the road under normal driving conditions. The software accomplished this by recognizing the standard published drive cycles. Based on these inputs, if the vehicle’s software detected that it was being tested, the vehicle performed in one mode, which satisfied US NOx emissions standards. If the software detected that the vehicle was not being tested, it operated in a different mode, in which the vehicle’s emissions control systems were reduced substantially, causing the vehicle to emit NOx up to 40 times higher than US standards.

Disagreements over the direction of the project were articulated at a meeting over which Hadler presided, and which Dorenkamp attended. Hadler authorized Dorenkamp to proceed with the project knowing that only the use of the defeat device software would enable VW diesel vehicles to pass US emissions tests.

Starting with the first model year 2009 of VW’s new “clean diesel” engine through model year 2016, Dorenkamp, Neusser, Hadler and their co-conspirators installed, or caused to be installed, the defeat device software into the vehicles imported and sold in the United States. In order to sell their “clean diesel” vehicles in the United States, the co-conspirators lied to the EPA about the existence of their test-cheating software, hiding it from the EPA, CARB, VW customers and the US. public. Dorenkamp, Neusser, Hadler, Gottweis, Schmidt, Peter and their co-conspirators then marketed, and caused to be marketed, VW diesel vehicles to the US public as “clean diesel” and environmentally-friendly.

Around 2012, hardware failures developed in certain of the diesel vehicles. VW engineers believed the increased stress on the exhaust system from being driven in the “dyno mode” could be the cause of the hardware failures. In July 2012, VW engineers met with Neusser and Gottweis to explain what they believed to be the cause of the hardware failures and explained the defeat device. Gottweis and Neusser each encouraged further concealment of the software.

In 2014, the co-conspirators perfected their cheating software by starting the vehicle in “street mode,” and, when the defeat device realized the vehicle was being tested, switching to the “dyno mode.” To increase the ability of the vehicle’s software to recognize that it was being tested on the dynamometer, the VW engineers activated a “steering wheel angle recognition feature.”

With these alterations, it was believed the stress on the exhaust system would be reduced because the engine would not be operating for as long in “dyno mode.” The new function was installed in existing vehicles through software updates. The defendants and other co-conspirators falsely represented, and caused to be represented, to US regulators, US customers and others that the software update was intended to improve durability and emissions issues in the vehicles when, in fact, they knew it was used to more quickly deactivate emission control systems when the vehicle was not undergoing emissions tests.

After years of VW selling their “clean diesel” vehicles in the United States that had the cheating software, in March 2014, West Virginia University’s Center for Alternative Fuels, Engines and Emissions published the results of a study commissioned by the International Council on Clean Transportation (ICCT). The ICCT study identified substantial discrepancies in the NOx emissions from certain VW vehicles when tested on the road compared to when these vehicles were undergoing EPA and CARB standard drive cycle tests on a dynamometer. Rather than tell the truth, VW employees, including Neusser, Gottweis, Schmidt and Peter, pursued a strategy to disclose as little as possible.

Following the ICCT study, CARB, in coordination with the EPA, attempted to work with VW to determine the cause for the higher NOx emissions in VW diesel vehicles when being driven on the road as opposed to on the dynamometer undergoing standard emissions test cycles. To do this, CARB, in coordination with the EPA, repeatedly asked VW questions that became increasingly more specific and detailed, and tested the vehicles themselves.

In implementing their strategy of disclosing as little as possible, Neusser, Gottweis, Schmidt, Peter and their co-conspirators provided EPA and CARB with testing results, data, presentations and statements in an attempt to make it appear that there were innocent mechanical and technological problems to blame, while secretly knowing that the primary reason for the discrepancy was their cheating software that was installed in every VW diesel vehicle sold in the United States. The co-conspirators continued this back-and-forth with the EPA and CARB for over 18 months, obstructing the regulators’ attempts to uncover the truth.

The charges in the indictment are merely accusations and each defendant is presumed innocent unless and until proven guilty.

Volkswagen deeply regrets the behavior that gave rise to the diesel crisis. Since all of this came to light, we have worked tirelessly to make things right for our affected customers and have already achieved some progress on this path. The agreements that we have reached with the US government reflect our determination to address misconduct that went against all of the values Volkswagen holds so dear. They are an important step forward for our company and all our employees.

—Matthias Müller, Chief Executive of Volkswagen Group

When the diesel matter became public, we promised that we would get to the bottom of it and find out how it happened – comprehensively and objectively. In addition, a task force of our Group Audit function conducted an investigation into relevant processes, reporting and monitoring systems as soon as the issue came to light. We are no longer the same company we were 16 months ago.

—Hans Dieter Pötsch, Chairman of the Supervisory Board of Volkswagen Group

Realigning the Group for the future. Since the end of September 2015, Volkswagen has taken significant steps to address the diesel matter and realign the Group for the future. The change process now under way is the biggest in Volkswagen’s history and will transform its core business.

The initiatives Volkswagen has implemented in response to the diesel matter include enhanced operational processes and reporting and control systems to ensure responsibilities are clear, a more robust whistleblower system and new, stricter standards in its emissions testing practices.

Other agreements in the US. On 25 October 2016, Volkswagen obtained final Court approval for a 2.0L TDI Settlement Program to resolve civil claims related to approximately 475,000 eligible Volkswagen and Audi 2.0L TDI vehicles in the United States. As part of that settlement program, Volkswagen will also pay $2.7 billion over three years into an environmental trust to remediate the total, lifetime excess nitrogen oxide (NOx) emissions from 2.0L TDI vehicles in the United States and invest $2.0 billion over 10 years in zero emissions vehicle (ZEV) infrastructure, access and awareness initiatives.

On 20 December 2016, Volkswagen reached an agreement with environmental regulators to resolve civil claims related to approximately 83,000 3.0L TDI V6 vehicles in the United States. The agreement, in the form of a proposed Consent Decree, would allow Volkswagen to recall more than 75 percent of affected 3.0L TDI V6 vehicles to bring them into compliance with the emissions standards to which they were certified, if appropriate modifications are approved by regulators. On December 22, 2016, Volkswagen Group reached an agreement in principle with the Court-appointed Plaintiffs' Steering Committee (PSC) on the payments and benefits that eligible US customers with affected 3.0L TDI V6 vehicles in the United States will receive under a proposed settlement. The Court has instructed the parties to file preliminary settlement approval documents by 31 January 2017.

Volkswagen has agreed separate settlements with 44 US states, the District of Columbia and Puerto Rico to resolve state consumer protection claims related to the diesel matter.

On 18 October 2016, Volkswagen received preliminary approval for a settlement to resolve the claims of approximately 650 VW-branded franchise dealers in the United States relating to TDI vehicles affected by the diesel matter and other matters asserted concerning the value of the franchise. The Court has scheduled a hearing on 18 January 2017 to decide whether to grant the proposed agreement final approval.



If the execs and employees are found guilty, I hope that they are given some prison time as an example. Oliver Schmidt was arrested last Saturday night in Florida and is in US custody but the others may be harder to take into custody.


They indict these guys but the sub prime bankers pay a fine.

Account Deleted

VW is going free of any punishment in the EU because the old auto industry controls the people that are supposed to independently monitor this industry. VWs crimes in EU are on a far more severe scale with 10 million highly polluting VW diesels polluting over 50 times the legal limit killing 10s of thousands of people prematurely every year.

A new report from The International Council on Clean Transportation (ICCT) has shown that small diesel cars in Europe now pollute 10 times as much in real world driving as Europe’s heavy duty diesel trucks. The worst part of it is that this extreme pollution from small diesels in EU is legal.

No wonder that more Europeans want to break out of the EU. It has unfortunately become heavily corrupted by out of control industry lobbying that are twisting legishlation to become completely dysfunctional and unable to do what is was supposed to do in terms of protecting humans from otherwise easily avoidable pollution.

There is more about this story here but the link is in Danish so you may need to translate it.;finans


VW is certainly wrong, but so are the testers etc. They just lazily accepted the word (and numbers) of the car companies.
Then they get all high and mighty when they detect cheating.
This is nothing new, there is a history of it happening, especially in the US, so they should have been on their guard.

The testing methods are basically a total cop-out, especially in Europe and need to be replaced with realistic approaches. The taxation systems set up using the fake NEDC CO2 levels will have to be redone to prevent the whole market from seizing up (in Europe).

The reason trucks are better than cars is that trucks are much more expensive than cars and so can withstand the cost of the emissions control equipment and they implemented random real world tests from 2013.

Guardian article on this in English ...

They will have to find a way to keep diesels out of big cities until they are fixed, but since half the cars in Europe are diesel, you have a big short term problem. The first thing to do would be to change the tax laws so diesel is not such a good deal. You could have different tax rates for rural and urban areas, but this would be open to cheating.
Not an easy problem to solve without putting all the diesels off the roads and inconveniencing millions of people.


SJC: I was and am deeply disappointed that none of the bankers that were complicit in the sub prime debacle were given prison time.


Well the tide has turned whether diesels, air bags or other business. If you harm others, you pay the price.

The comments to this entry are closed.