VW Diesel Scandal

In a published report, the Federal Trade Commission (FTC) said Volkswagen paid U.S. victims of its emissions cheating scandal, better known as “Dieselgate,” a total of $9.5 billion. 

Volkswagen admitted in 2015 that it used “defeat devices” to score better on emissions tests. The following year, the company gave U.S. consumers who unwittingly purchased one of these vehicles the option of either returning it to Volkwagen for financial compensation or having it repaired to comply with emissions regulations. 

The FTC said in a final court summary that more than 86 percent of consumers opted to return their car through a buyback or early lease termination. The agency said Volkwagen “successfully managed the settlement administration process effectively,” despite the large volume of claims. 

“Most important, the FTC orders and related private class settlements provided redress sufficient to compensate consumers fully,” the FTC said in the report.

Closing the Dieselgate scandal

Volkwagen pleaded guilty to fraud, obstruction of justice, and falsifying statements as part of a multi-billion dollar settlement negotiated with the Justice Department. The scandal also led to the resignation of Volkswagen Group CEO Martin Winterkorn and was a key factor in the company’s decision to shift to electric vehicles. 

The FTC’s final report on the matter puts an end to what the FTC described as “one of the most successful consumer redress programs in history.”

On Monday, roughly five years after Volkswagen’s “dieselgate” scandal began unfolding, a court ordered the automaker to return money to owners of vehicles with rigged diesel engines in Germany. 

Germany’s federal court, the Bundesgerichtshof (BGH), ruled that owners will be allowed to return vehicles for a partial refund of the purchase price. 

“The verdict by the BGH draws a final line. It creates clarity on the BGH’s views on the underlying questions in the diesel proceedings for most of the 60,000 cases still pending,” Volkswagen said.

Holding VW accountable

In 2015, Volkwagen admitted that it manipulated the engines in its vehicles in order to perform better on emissions tests. The affected cars were banned in the U.S., and claims for compensation soon began pouring in. Affected VW vehicles weren’t banned in Europe, but VW was forced to update its engine control software. 

Fines and vehicle refits stemming from the scandal have cost the automaker more than $33 billion. 

The ruling is likely to serve as a template for tens of thousands of other claims against Volkwagen. Outside Germany, more than 100,000 claims for damages were still pending; 90,000 of those cases were in Britain, according to a VW spokesperson.

In a statement sent to Euronews, VW spokesperson Nicolai Laude said the size of the one-time reimbursement to owners in Germany will be determined on a case-by-case basis. Claus Goldenstein, lawyer for plaintiff Herbert Gilbert, said the ruling “means legal certainty for millions of consumers and shows once again that even a huge corporation isn't above the law.” 

Volkswagen said in a statement that it’s aiming to “soon bring these cases to a close in agreement with the plaintiffs.” The company said "appropriate offers" will be made to affected owners.

Volkswagen got caught cooking the books on its diesel emissions. Since then, the company has paid millions of dollars in fines and announced a major electric car initiative. A federal judge says it’s time to move on.

Federal Judge Charles Breyer is asking why the Securities and Exchange Commission (SEC) waited two years to sue the automaker after the company had settled with other U.S. regulators. Last week he said he was putting off the SEC’s suit while he urged both parties to reach a settlement.

“I want you to spend the next month or so seeing if you can resolve this case,” Breyer told the two parties.

Breyer said he is putting a halt to proceedings until early October to give both sides time to work out a settlement.

“Whatever you work out today would be less expensive to everybody than what you would work out in the future,” Breyer said.

Suit filed in March

In March, the SEC sued Volkswagen and its former chief executive Martin Winterkorn, charging them with defrauding U.S. bond investors by not informing them of the scope of its diesel emissions scheme sooner.

"Volkswagen hid its decade long emissions scheme while it was selling billions of dollars of its bonds to investors at inflated prices," Stephanie Avakian, the co-director of the SEC's Division of Enforcement, said earlier this year.

Timing appeared to be a significant influence on Breyer’s request. He said he was “mystified” why the SEC waited so long to take action.

The “Dieselgate” scandal, in which the German automaker was found to have used illegal software to cheat U.S. pollution tests, first came to light in 2015. The SEC says Volkswagen issued more than $13 billion in bonds between April 2014 to May 2015.

The agency claims that senior executives at Volkswagen knew that more than a half million vehicles in the United States grossly exceeded legal vehicle emissions limits, exposing the company to massive financial and reputational harm.

The European Commission has accused BMW, Daimler, and Volkswagen of breaking antitrust rules by working together to delay the introduction of clean emissions technology.

In “statements of objections” sent to the companies, the Commission said it believes the companies did in fact violate antitrust rules when they colluded during technical meetings that took place between 2006 and 2014.

Specifically, the Commission has accused BMW, Daimler, and VW of coordinating their AdBlue dosing strategies and delaying the use of Otto Particle Filters, which reduce particulate emissions from the exhaust of petrol passenger cars.

“In the Commission's preliminary view, BMW, Daimler and VW coordinated their AdBlue dosing strategies, AdBlue tank size and refill ranges between 2006 and 2014 with the common understanding that they thereby limited AdBlue-consumption and exhaust gas cleaning effectiveness,” the Commission said in a press release.

By restricting competition on the development of emissions-reducing technology, the Commission says the companies denied consumers the opportunity to purchase cars that produced fewer emissions, “despite the technology being available to the manufacturers.”

The statements of objections come almost two years after the EU carried out inspections at the German carmakers’ premises.

Companies could face hefty fines

BMW, Daimler, and VW now have an opportunity to appeal the EU’s suspicions in writing and request an oral hearing.

“If, after the parties have exercised their rights of defence, the Commission concludes that there is sufficient evidence of an infringement, it can adopt a decision prohibiting the conduct and imposing a fine of up to 10% of a company's annual worldwide turnover,” the EU said.

The accusations come less than a month after the SEC charged Volkswagen and its former CEO Martin Winterkorn with defrauding U.S. investors by deliberately concealing its emissions scheme, known as “Dieselgate,” while selling billions in bonds.

A federal grand jury in Detroit indicted four former German Audi officials on Thursday over the diesel emissions scandal, court documents reveal.

The executives -- Richard Bauder, Axel Eiser, Stefan Knirsch, and Carsten Nagel -- were charged with multiple counts of violating the Clean Air Act, conspiracy to defraud the United States, and wire fraud. If convicted, each charge carries up to 20 years in prison.

None of the four men are currently in United States custody. Reuters reports that they are believed to be in Germany and do not yet appear to have American attorneys on the case.

During their employment, the four allegedly helped design and test “defeat devices” for Audi cars that were used to help the brand cheat Environmental Protection Agency (EPA) emissions tests, the criminal cases alleges.

The Audi officials are just the latest to face criminal charges over their parent company Volkswagen’s emissions cheating scandal, in which Volkswagen admitting to rigging the engines on their “clean diesel” cars.

Volkswagen and Audi agreed to stop selling cars with diesel engines after getting caught in 2015. The diesel engines emitted as much 40 times the legally allowable limit of smog when they were on the road from 2008 through 2015.

Volkswagen’s subsidiary Audi has been hit with a fine of nearly $930 million over its role in the diesel emissions cheating scandal that first began unfolding three years ago.

In a statement on Tuesday, the automaker said it accepted the fine and does not plan to appeal.

“Audi AG has accepted the fine” imposed by German prosecutors for “deviations from regulatory requirements in certain V6 and V8 diesel aggregates (motors) and diesel vehicles,” the company said in a statement.

Audi said, "the fine will directly affect Volkswagen AG's financial earnings and, as a negative special item, reduce the group earnings for fiscal year 2018 accordingly."

Billions in fines

The diesel emissions scandal first broke in 2015, when VW admitted that it had installed “defeat devices” in 11 million diesel-powered cars worldwide. The software enabled the cars to pass emissions tests even though they emitted up to 40 times the legal amount of pollution the rest of the time.

The fine levied against Audi is just the latest consequence of the scandal. Volkswagen has already shelled out billions of dollars in fines for its participation in the scandal, and in June, Audi CEO Rupert Stadler was arrested for his connection with the scandal.

Prosecutors said the latest probe concerned V6 and V8 diesel engines manufactured by Audi and installed in Audi, Volkswagen, and Porsche brands, as well as Audi vehicles equipped with EA 189 and EA 288 engines made by Volkswagen.

By agreeing to pay the latest fine, Audi is helping to bring its parent company Volkswagen “one step closer to putting its ongoing diesel emissions scandal behind it,” CNBC said.

According to the judge of the damages case brought by investors against Volkswagen, former CEO Martin Winterkorn was slow to address the company’s emissions cheating scandal.

Investors are looking for 9.2 billion euros ($10.6 billion) in damages from the suit to make up for the share prices they lost when the scandal became public. The final outcome of the suit will come down to who was privy to information -- and when.

The scandal broke on September 18, 2015 when the Environmental Protection Agency (EPA) issued a notice of violation. The investors are accusing Volkswagen of not disclosing this information with them -- specifically how much money was involved.

Now, Judge Christian Jaede reported that Winterkorn was certainly aware of the breadth of the scandal. According to Jaede, Volkswagen was on the verge of getting banned by United States regulators because of high pollution levels. Following a meeting with VW higher-ups that took place two months prior, Winterkorn dragged his feet on the issue.

“Anyone acting in good faith would have followed up on this information,” Jaede said. “This appears not to have happened.”

Winterkorn resigned just days after the scandal broke, though he did say he was unaware of the scandal until Volkswagen officially announced it.

Push for the truth

In September 2015, Volkswagen admitted to equipping over 11 million of its diesel vehicles with illegal software to cheat the U.S. emissions tests. The scandal has not only cost the company billions of dollars, but it has also led to the indictment of several top executives.

In January 2017, Volkswagen settled U.S. Justice Department criminal and civil charges, shelling out $4.3 billion. The company agreed to plead guilty to three criminal felony charges and pay a $2.8 billion criminal penalty. It also paid $1.5 billion in separate civil resolutions.

All of these penalties are on top of the $15 billion VW agreed to pay owners of Volkswagens, Audis, and Porsches equipped with 2.0-liter TD Clean Diesel engines, and the $1 billion it has agreed to pay consumers with 3.0-liter diesels.

Volkswagen was charged with -- and plead guilty to:

• Participating in a conspiracy to defraud the United States and VW’s U.S. customers;

• Violating the Clean Air Act by lying and misleading the EPA and U.S. customers about whether its cars complied with U.S. emissions standards;

• Using cheating software to circumvent the U.S. testing process; and

• Concealing material facts about its cheating from U.S. regulators.

However, the scandal leaked into 2018 when Audi CEO Rupert Stadler was arrested over “concerns over potential evidence tampering” in the diesel-emissions cheating case. Stadler’s home was raided by authorities one week before the arrest, and he was immediately named a suspect in the investigation.

Just last month, an independent compliance auditor complained he wasn’t getting enough information out of VW. Larry Thompson, who was appointed by the U.S. Justice Department to monitor Volkswagen’s efforts to comply with the settlement charges, said that the company was relying too heavily on privacy and attorney/client privilege to withhold any information.

Rupert Stadler, the CEO of Volkswagen’s Audi division, was arrested on Monday over “concerns over potential evidence tampering” in the probe of Volkswagen’s diesel-emissions cheating case.

The arrest comes one week after the executive’s home was raided by authorities, who afterwards named him a suspect in their investigation into fraud and falsifying public documents in relation to the “dieselgate” scandal.

Last week, Volkswagen also agreed to pay a fine of about $1.16 billion for failing to properly supervise the staff members who came up with the software used to cheat emissions tests.

Stadler’s is the highest-profile arrest in the ongoing investigation into Volkswagen’s manipulation of emissions controls, which first came to light in 2015.

“Munich prosecutors said in a statement Monday that Rupert Stadler, who has worked for Audi parent company Volkswagen since 1990, had been detained because of concerns over potential evidence tampering,” CNN Money reports.

Ongoing case

Volkswagen admitted in September 2015 to equipping over 11 million of its diesel cars with illegal software to cheat U.S. emissions tests. The scandal has cost the company billions of dollars and has led to the indictment of several top executives.

"As part of an investigation into diesel affairs and Audi engines, the Munich prosecutor's office executed an arrest warrant against Mr Professor Rupert Stadler on June 18, 2018," the Munich prosecutor's office said in a statement.

Prosecutors in Munich have ordered that Stadler be detained to prevent him from fleeing, influencing witnesses, or in any way obstructing the investigation.

A VW spokesperson confirmed to CNN Money that Stadler had been arrested but declined to comment on the investigation. He said the automaker’s board would discuss it later Monday.

"The principle of the presumption of innocence continues to apply to Mr. Stadler," the spokesperson said in a statement.

Volkswagen has vowed to stop funding experiments that test the effects of diesel exhaust on animals, the New York Times reports.

The pledge follows the company’s emissions cheating scandal and pressure from animal rights groups. In January, it was revealed that the company funded a study that put 10 monkeys inside airtight chambers and exposed them to fumes from a diesel VW Beetle and an old pickup truck for four hours.

The company’s pledge to stop financially supporting animal testing came in a letter to the German branch of People for the Ethical Treatment of Animals (PETA). PETA says the automaker promised it won’t conduct experiments on animals unless it is required by law.

PETA praised the move

In the letter, Herbert Diess, Volkswagen’s chief executive, said that the company’s decision to conduct experiments on primates was ethically questionable. However, he maintained that the tests did not violate any U.S. laws.

“Research projects and studies must always be balanced with consideration of ethical and moral questions,” Diess wrote. “Volkswagen explicitly distances itself from all forms of animal abuse. In the future, we will rule out all testing on animals, as long as there are no pressing — such as legal — reasons that would make this necessary.”

PETA said Volkswagen “did the right thing” by vowing to stop conducting tests on animals.

“PETA is calling on other carmakers that still test on animals to follow suit and embrace modern and humane, animal-free research methods instead,” said Kathy Guillermo, a senior vice president for PETA.

Recovering from emissions-cheating scandal

The German automaker’s pledge to stop funding animal testing is its latest effort to recover from the emissions-cheating scandal, which became public nearly three years ago.

At that time, the Environmental Protection Agency (EPA) reported that about a half million Volkswagens equipped with diesel engines had been found with on-board software to defeat pollution controls.

The scandal resulted in tens of billions of dollars in settlements and fines, as well as the imprisonment of former top company executives. Volkswagen is also facing a lawsuit filed by shareholders that could add billions to the company’s costs.

A federal grand jury has indicted former Volkswagen CEO Martin Winterkorn, and five other former VW executives, on charges related to the carmaker's diesel emissions cheating scandal.

The criminal charges include conspiracy and wire fraud relating to VW's installation of software in its diesel powered cars that reduced emissions to acceptable levels only when it detected the car was being tested. The rest of the time, the emissions were found to be up to 40 times the legal limit.

The indictment was handed down by a federal grand jury sitting in the Eastern District of Michigan. It accuses Winterkorn and other senior executives with trying to defraud the United States, defraud VW’s U.S. customers, and violate the Clean Air Act by making false claims to regulators and the public about the company's “clean diesel” vehicles.

Pay a heavy price

“If you try to deceive the United States, then you will pay a heavy price,” said Attorney General Jeff Sessions. He notes the indictment is especially serious because it charges that Volkswagen's plan to mislead regulators and consumers went all the way to the top.

“These are serious allegations, and we will prosecute this case to the fullest extent of the law,” Sessions said.

The scandal became public nearly three years ago when the Environmental Protection Agency (EPA) reported that about a half million Volkswagens equipped with diesel engines had been found with on-board software to defeat pollution controls. Those controls reduced the amount of emissions but significantly reduced performance and fuel efficiency.

At the time, VW was competing with hybrid models by claiming its TDI engines were nearly as fuel efficient and environmentally friendly as hybrids.

The scandal deepened weeks later after the EPA said the defeat software was present on a much wider range of Volkswagen and Audi vehicles.

Costly for Volkswagen

The scandal proved costly for Volkswagen, which suspended sales of all diesel vehicles in the U.S., paid multi-million dollar fines to regulators, bought back millions of affected cars, and faced lawsuits from angry dealers and consumers.

It also led to a change in the company's business plan. In June 2016, Volkswagen announced a major commitment to producing electric cars by promising to introduce 30 electric models by 2025 as it phases out diesel vehicles altogether.

In March 2017, Volkswagen – as a corporation – pleaded guilty to criminal charges that it deceived U.S. and state regulators by installing so-called defeat devices in diesel vehicles emissions control systems that were designed to cheat emissions tests.

In a statement to the media, Volkswagen said it continues to cooperate with investigators but declined to comment on the individual indictments.

Volkswagen will pay $157 million to 10 states that sued the company for its secret use of unlawful "defeat device" software to enable their diesel-powered cars to pass emissions inspections.

It's the first time the states have won environmental penalties against an automaker on their own. Previously, such cases were handled soley by the federal government.

“Volkswagen, Audi and Porsche tried to pull off an extraordinarily cynical corporate fraud – deceiving hundreds of thousands of consumers, pumping thousands of tons of harmful pollution into our air, and flouting New York and federal environmental laws designed to protect public health,” said New York Attorney General Eric T. Schneiderman. “This went on for nearly a decade, for no other reason than their bottom line, so the companies could avoid the expense of engineering cars that would actually meet our environmental standards."

"Adding insult to injury, they marketed these dirty vehicles as environmentally-friendly and technologically-advanced – not only deceiving consumers and harming our environment, but also undercutting the sales of their law-abiding competitors,” Schneiderman said.

States follow California

The lawsuits that led to the settlement were filed last summer by New York and Massachusetts. All of the states joining in the action have adopted California's stringent vehicle emission standards. The other states are Connecticut, Delaware, Maine, Oregon, Pennsylvania, Rhode Island, Vermont, and Washington.

Schneiderman said that setting the precedent of states enforcing emission laws is important because of President Trump's vow to defund federal environmental enforcement, leaving states like New York and California as the first line of defense in environmental matters.

"New York will continue to enforce the tough auto emission and greenhouse gas standards established by California, and intends to oppose any effort by the federal government to roll back EPA emission standards currently in place," a statement from Schneiderman's office said.

Electric cars

As part of today’s settlement, Volkswagen has agreed to substantially increase its commitment to New York’s emerging electric car market. The agreement requires Volkswagen to – by 2020 – at least triple the number of electric car models its Volkswagen, Porsche, and Audi brands offer to New Yorkers from one model to three, including two electric SUVs.   

“Volkswagen was caught – and today’s settlement means we’ve now held them to full account,” Schneiderman continued. “No company – however large or powerful – is above the law in New York.  As we’ve made clear, if the federal government fails to do its job, I will continue to enforce our state’s environmental laws and hold accountable anyone who violates them – to ensure New Yorkers’ public health and environment are protected.”