Volkswagen fined by German prosecutors over the Dieselgate scandal

14 June 2018

Volkswagen fined by German prosecutors over the Dieselgate scandal

14 June 2018

Volkswagen (VW) has been fined a total of €1.2 billion by German prosecutors for its role in the Dieselgate scandal.

The fine is considerably smaller than the total $30 billion (€25.8 billion) that was levied on the German manufacturer in the US, where the company was found guilty of emissions fixing with software designed to detect when a vehicle was under test. However, the company has accepted the fine and hopes to move forward.

The Braunschweig public prosecutor found VW had sold more than 10 million cars between mid-2007 and 2015 that had emissions-test-cheating software installed. While the carmaker has denied that it ever cheated tests in Europe, it has decided not to contest the fine, instead accepting its part in the diesel crisis and hoping to finally draw a line under the matter.

‘Following a thorough examination, Volkswagen AG accepted the fine, and it will not lodge an appeal against it. Volkswagen AG, by doing so, admits its responsibility for the diesel crisis and considers this as a further major step towards the latter being overcome,’ the manufacturer said in a statement. ‘As a result of the administrative order imposing the fine, the active regulatory offence proceedings conducted against Volkswagen will be finally terminated. Volkswagen assumes that such termination of the proceedings will also have significant positive effects on further active administrative proceedings in Europe against the Volkswagen AG and its subsidiaries.’

German prosecutors are also investigating whether senior VW executives including Chairman Hans Dieter Poetsch and CEO Herbert Diess informed investors in a timely fashion about the size of potential fines faced by the automaker for cheating US emissions tests. The company denies any wrongdoing by its executives.

‘On market manipulation, it is possible that there will be a decision this year. A decision does not necessarily mean bringing charges; it could mean closing the proceedings,’ Braunschweig prosecutor Klaus Ziehe said at a news conference.

The fine is likely to spell the end of any further criminal investigations into emissions manipulation in Europe. However, shareholder lawsuits and group actions being brought by drivers of affected vehicles are still expected to go ahead.

The announcement that VW has accepted the fine, which will come from earnings and was not budgeted in the company’s initial plans for Dieselgate fallout, signifies its desire to move on from a scandal that has affected the entire automotive market. Earlier this month, German motor authority, the KBA, ordered Daimler to recall over 750,000 vehicles due to concerns over defeat devices being fitted.

There are also reports that VW’s ECU supplier Bosch may be called to supply evidence in investigations against Poetsch and Diess. Stuttgart prosecutors launched investigations into the German supplier and its dealings with VW in 2015 when the Dieselgate scandal broke and added further investigations in 2017 about alleged emission irregularities at Daimler.