Volkswagen to pay $2.8-billion criminal fine in U.S. diesel emissions scandal

A federal judge on Friday ordered Volkswagen to pay a $2.8-billion U.S. criminal penalty for cheating on diesel emissions tests, blessing a deal negotiated by the government for a “massive fraud” orchestrated by the German automaker.

U.S. District Judge Sean Cox stuck to the plea deal during the sentencing hearing, six weeks after VW pleaded guilty to conspiracy and obstruction of justice in a bold scheme involving nearly 600,000 diesel cars in the U.S. They were programmed to turn on pollution controls during testing and off while on the road.

“It was an intentional effort on the part of a major corporation to evade U.S. law and lie to U.S. regulators,” Assistant U.S. Atty. John Neal told the judge.

Speaking from the bench in the heart of the global auto industry, Cox said he was amazed that Volkswagen would commit such a crime.

“Who has been hurt by this corporate greed? From what I can see it’s not the managers at VW, the ones who get paid huge salaries and large bonuses. As always it’s the little guy,” the judge said, referring to car buyers and VW’s blue-collar workers who might earn less in the future.

Separately, VW is paying $1.5 billion in a civil case, mostly to settle allegations brought by U.S. environmental regulators, and spending $11 billion to buy back cars and offer other compensation.

Seven employees have also been charged with crimes in the U.S., but five are in Germany and are unlikely to be extradited.

Cox urged the German government to “prosecute those responsible for this deliberate massive fraud that has damaged an iconic automobile company.”

In brief remarks to the judge, VW defense attorney Jason Weinstein said the criminal fine was an “appropriate and serious sanction.”

Volkswagen general counsel Manfred Doess said the company is not the same one that was caught cheating 18 months ago.

“Volkswagen deeply regrets the behavior that gave rise to this case. Plain and simple it was wrong,” Doess said. “We let people down and for that we’re deeply sorry.”

Neal disclosed that a former Justice Department official, Larry Thompson, will serve as a monitor to ensure that VW complies with the plea agreement, which includes three years of probation and complete future cooperation with any inquiries by investigators.

U.S. regulators confronted Volkswagen about the cheating software after West Virginia University researchers discovered differences in testing and real-world emissions from VW engines of harmful nitrogen oxide. Volkswagen eventually admitted that the cars were programmed to turn pollution controls on during testing and off while on the road.

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UPDATES:

2:40 p.m.: This article was updated with additional context and background.

This article was originally published at 7:40 a.m.