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VW’s $4.3 billion (£3.5 billion) settlement for criminal wrongdoing draws to a close
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The VW Group initially set aside $18.2 billion (14.9 billion pounds) to pay for its wrongdoing in the emissions scandal.
However, the way these settlements are going, the German automakers will have to put their cheque-books on standby, as VW are set to pay-out another $4.3 billion (£3.5 billion) in the latest settlement.
There is, of course, our action here in the U.K. as well which will cost them a pretty penny too.
Since VW’s cheating emissions testing transpired in September 2015, VW has been subject to multiple investigations, leading to multi-billion dollar settlements in the U.S.
VW denied any criminal wrongdoing – typical of any major corporation. However, this week, the auto-maker revealed that it would admit to their wrongdoing.
On 10th January, VW said they had plans to admit wrongdoing in both criminal and civil investigations brought against them by U.S. regulators and prosecutors, in a bid to settle the investigations.
Though there aren’t any further details of the settlement, aside from the hefty $4.3 billion (£3.5 billion), VW said it was in “advanced discussions”.
It’s rare that a company of that size and reputation would buckle under pressure and admit its criminal wrongdoing. Thus, you may ask, why have they? I suspect this for two reasons:
Their admission of wrongdoing also contrasts starkly to other auto-makers. Toyota and GM have had problems with some of their models; namely acceleration of vehicles, and faulty ignition switches. Both of these auto-makers paid out huge fines but didn’t admit to any criminal wrongdoing.
David Uhlmann, a former head of Justice Department in the environmental crimes section, reiterated that companies shouldn’t be allowed to “buy their way out of criminal prosecution – as Toyota and GM were able to do”.
The settlement offer hasn’t been finalised yet, as the deal with the U.S. Department of Justice and U.S. Customs and Border Protection will need to be approved by VW’s top management and board of directors, including CEO Matthias Mueller. After the approval by the VW Group, the settlement will then need to be approved by the District Judge. If past experience is an indicator, the settlement will be approved.
There are still multiple lawsuits being pursued worldwide, as well as criminal investigations in countries outside of the U.S.
Even after paying out the settlements, VW may still be heavily monitored by independent bodies to ensure they’re complying with regulations for the next three years.
As the Environmental Protection Agency Administrator, Gina McCarthy, quite rightly stated, “When you break the laws designed to protect public health in this country, there are serious consequences”. The VW Group has most certainly felt the brutal consequences from their cheating.
The admission of criminal wrongdoing will also affect VW’s defence against investor lawsuits, which claim that VW should’ve disclosed the financial risks that stemmed from the emissions cheating as soon as they knew. It alleges that the German auto-makers knew of the risk long before it was published in the news.
In a nutshell, VW has a long way to go before their reputation will be squeaky clean again, and their financial burden relieved.
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