Volkswagen AG pleaded guilty Friday in a Detroit federal court to criminal charges for cheating on government emissions tests. Volkswagen General Counsel Manfred Döss entered the guilty plea on the company’s behalf before U.S. District Judge Sean F. Cox. The company pleaded guilty to conspiracy to defraud the U.S., commit wire fraud, violate the Clean Air Act, obstruction of justice, and import violations.
Volkswagen signed a plea agreement with U.S. Justice Department weeks before the formal court hearings. The plea agreement includes a $2.8 billion criminal fine and an additional $1.5 billion civil penalty. Previous civil settlements with consumers, regulators, dealers, and state attorneys general in the U.S. could end up costing Volkswagen more than $20 billion.
In addition to the criminal penalties, Volkswagen must accept the assignment of an independent monitor to audit its regulatory compliance practices for at least three years. The government could have fined Volkswagen up to $34 billion, but lowered the amount due to the company’s cooperation with the investigation and efforts to compensate consumers. Judge Cox said he accepted the plea but postponed agreeing to proposed fines and terms of a settlement until April 21.
Volkswagen admitted to conspiring to deceive U.S. officials with illegal software that hid the real emissions of its diesel vehicles for nearly a decade. The software allowed nearly 600,000 diesel-powered vehicles to pass emissions tests and then pollute beyond legal limits while being driven, sometimes at up to 40 times above allowable limits. The U.S. Environmental Protection Agency exposed Volkswagen’s deception in September 2015.
Volkswagen admitted to installing the software on about 11 million vehicles globally. The scandal hammered the German auto company’s reputation and finances. Volkswagen’s guilty plea does not end its legal troubles. Shareholder lawsuits in the United States and Europe could cost the company an additional $10 billion.
Several current and former Volkswagen executives and employees were separately charged in the criminal probe. Assistant U.S. Attorney John Neal said during Friday’s court hearing that the conspiracy reached the “highest levels of the corporation.” To date, seven Volkswagen executives and employees have been indicted by a federal grand jury for their role in the emissions fraud. Some of the company’s supervisors and employees are accused of destroying documents and files after learning of the emissions probe.
Oliver Schmidt, the former head of Volkswagen’s Environment and Engineering Office in Auburn Hills, Mich., was arrested in January at Miami International Airport before he could travel home to Germany. He has pleaded not guilty to the criminal charges against him. He is currently is being held at a Detroit jail awaiting trial. James Liang, an engineer who pleaded guilty to criminal conduct in the matter, is scheduled to be sentenced in May.