VW Emissions Scandal Update; $4.3 Billion Settlement, Six Executives Indicted
The second week of January was not kind to Volkswagen (VW). The German automaker has agreed to plead guilty to charges brought by U.S. Authorities, including conspiracy to commit wire fraud, deceiving U.S. consumers, and violating the Clean Air Act. The guilty plea came with a $4.3 billion dollar fine, which is on top of the $17.5 billion that VW has already promised to shell out. The automaker also issued a new and unrelated recall of nearly 136,000 vehicles because of a brake problem just a few days before stockholders heard that one of their executives had been detained and charged in Florida.
Not a great way to start the new year.
In addition, six individuals, who currently work or previously worked at VW, were officially indicted by the U.S. Department of Justice (DoJ) for crimes connected to the automaker’s global emission cheating scandal. VW agreed to pay a $2.8 billion criminal fine and a $1.5 billion civil fine on Wednesday, which together is the largest fine ever brought down on an automaker in the agency’s history. Today it was reported that all six senior VW managers had been told not to leave Germany by VW’s team of legal advisers, but one man did not listen to their warnings.
Oliver Schmidt, VW’s former U.S. compliance officer, was arrested over the weekend on a layover at Miami’s International Airport and was charged with eleven felony counts. Schmidt was reportedly flying back to Germany from a holiday in Cuba and is now being held without bail over concerns that he is a flight risk. It is unlikely that the other five employees will be extradited from Germany to the United States because of their protections as German citizens. But Attorney General Loretta Lynch said that U.S. authorities will do everything in their capacity to apprehend all “individuals responsible for orchestrating this damaging conspiracy.”
Volkswagen Apologetic, Regrets “Dieselgate”
“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,” said Matthias Müller, the current CEO of VW. “The agreements that we have reached with the U.S. government reflect our determination to address misconduct that went against all of the values Volkswagen holds so dear.”
Preceding the DoJ announcements, VW recalled 135,682 of their automobiles in the U.S. over reports that the Antilock Braking System (ABS) can fail while the car is in motion. The recall, unrelated to the emissions scandal, affects seven lines of VW from model years 2009 to 2010 (Jetta A5, Jetta SportWagen, EOS, GTI, Rabbit, Golf A6, Audi A3). VW believes a defective solder compound is to blame, but the automaker told authorities a software update will fix the problem. No injuries were reported at the time of the recall and VW said that they will notify owners to schedule their free repairs in the coming weeks.
In spite of the recall and criminal announcements, VW’s stock has been climbing steadily. Yesterday their stock closed at $147.30 a share, which is up from $118.75 in early December. VW hit a 5-year low of $92.36 in early October 2015 just after the scandal broke. Five months before the diesel news hit, VW was trading at a five year high of $253.20 per share.
To see if your VW has been recalled see: http://consumerwatch.com/vehicle-recall-checker-by-vin-check-vehicle-recalls/
