The Justice Department detailed an elaborate and wide-ranging scheme to commit fraud and then cover it up. At least 40 VW employees were involved in destroying evidence, the government said. The penalty against the company is the largest ever levied by the government against an automaker, eclipsing the $1.2 billion fine against Toyota in 2014 over safety issues related to unintended acceleration.
Volkswagen agreed to pay a $2.8 billion criminal fine and an additional $1.5 billion in civil penalties. The penalty is levied after the company admitted to installing software into diesel engines on nearly 600,000 vehicles in the U.S. that allowed the engines to turn on pollution controls during government tests and switch them off in real-world driving. The 'defeat device' used in these cars improved engine performance but spewed out harmful nitrogen oxide up to 40 times above the legal limit.
Volkswagen at first denied the use of the defeat device, but finally admitted to it in September 2015. In fact Audi had admitted that it created the software for VW in 1999. In fact a probe revealed that the use of the 'defeat device' was an open secret within the company. U.S. regulators confronted VW employees about the use of the software following tests conducted by university researchers that showed differences in testing and real-world emissions.
The German company pleaded guilty to conspiracy, obstruction of justice and importing vehicles by using false statements in a plea deal. It also requires VW to cooperate in a continuing probe that could lead to the arrest of more employees.
Government documents accuse six VW supervisors of lying to environmental regulators or destroying computer files containing evidence. In one case, one of the six engine development supervisors asked an assistant to search another supervisor's office for a computer hard drive that contained emails between them. Once the hard drive was found, another assistant was asked to throw it away.
According to the plea agreement, the supervisors and other employees agreed to deceive the Environmental Protection Agency and other regulators about diesel emissions starting in May 2006, when they realized the engines wouldn't meet emissions standards that were going into effect in 2007.
Under the direction of supervisors, VW employees designed engines with "defeat device" software that would reduce emissions only when the vehicle was undergoing a standard U.S. emissions test. They borrowed the idea from VW's luxury division, Audi, which was developing different engines with similar software.
In November 2006, some employees raised objections to the defeat device to the head of VW brand engine development. That official directed the employees to continue and warned them "not to get caught." In 2014, VW employees learned about a West Virginia University study that identified emissions discrepancies in VWs. Three of the supervisors and other employees decided not to disclose the defeat device to U.S. regulators, despite increasing questions from the EPA and the California Air Resources Board.
On Aug. 19, 2015, a VW employee ignored instructions from supervisors and told U.S. regulators about the defeat devices. A supervisor confirmed the devices the following month. VW also has agreed to the appointment of an independent monitor to oversee compliance and control measures for three years.
Volkswagen previously reached a $15 billion civil settlement with environmental authorities and car owners in the U.S. under which it agreed to buy back up to 500,000 vehicles. The company also faces an investor lawsuit and criminal probe in Germany. In all, some 11 million vehicles worldwide were equipped with the software.
In India too Volkswagen had to recall 1.9 lakh cars starting July 2016. Volkswagen had clarified then that this is purely a voluntary recall to fix the emission software, as the company is not facing any charges in India for the emission scandal. The effect of this revelation took a huge toll on Volkswagen sales volume in India, in fact it was even alleged that the company is considering lay-offs at its Pune plant. The folks at Volkswagen say that the company has complied with all the emission norms in India, compliant with Bharat Stage IV standards.
