Six high-level Volkswagen employees indicted in emissions scandal

Six Volkswagen executives were indicted Wednesday on federal charges tied to the German automaker’s emissions scandal, and the company agreed to plead guilty to violating U.S. air quality laws.

Top Justice Department and U.S. environmental officials called the legal action, including Volkswagen’s agreement to pay $4.3 billion in fines and penalties, a significant step in the long-running effort to hold the automaker accountable for brazenly dodging pollution rules to tap the lucrative market for “green” cars.

“This is a case that illustrates a company that at very high levels knew of this problem and deliberately chose to continue with this fraudulent behavior,” Atty. Gen. Loretta Lynch said at a news conference also attended by EPA Administrator Gina McCarthy. “Here we saw a company where this knowledge and the choice they made went to the executive level.”

As part of the deal, Volkswagen agreed to plead guilty to conspiring to defraud the U.S. government, defraud consumers and violate the Clean Air Act. It admitted it sold nearly 600,000 diesel cars in the U.S., starting in model year 2009, that employed software that cheated emissions tests and spewed far more pollution into the atmosphere than legally permitted.

The automaker issued a statement Wednesday saying it has fully cooperated with the U.S. investigation and regretted its behavior.

“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,” Chief Executive Matthias Mueller said. “They are an important step forward for our company and all our employees.”

As part of its plea agreement, Volkswagen also will have to retain an independent monitor to oversee its ethics and compliance programs. On Tuesday, VW announced it was in “advanced talks” with U.S. authorities to resolve civil and criminal fines.

The six high-ranking VW executives, all German citizens, were indicted by a federal grand jury in Detroit. One of the executives, Oliver Schmidt, 48, who was once in charge of environmental compliance, was arrested Jan. 7 while visiting Miami, the Justice Department said.

The remaining five are believed to be in Germany, and U.S. authorities could not say if or when they might be brought to the U.S. to face charges. Those in Germany include Heinz-Jakob Neusser, 56, the chief of development for the VW brand until September 2015, and Jens Hadler, 50, the head of engine development from 2007 through 2011.

Since the emissions cheating became public in September 2015, Volkswagen has agreed to pay a staggering $20 billion in fines, settlements and penalties in an effort to put the scandal in its rearview mirror. It also has been required to fund $3 billion in environmental mitigation projects.

The financial costs to Volkswagen have dwarfed settlements reached with Toyota and GM in 2014 and 2015, respectively, that resolved safety problems that led to deaths and injuries.

Justice Department officials said VW was paying a steeper financial price because the scheme was directed by the company’s top executives and they tried to cover up their misdeeds rather than come clean.

“It is now clear that Volkswagen’s top executives knew about this illegal activity and deliberately kept regulators, shareholders and consumers in the dark, and they did this for years,” said Andrew McCabe, deputy director of the FBI. “If environmentally conscious buyers are told they are purchasing green cars, they should actually be getting, in fact, green cars, not cars that spew out pollution in excess of federal and state regulations.”

Court papers show that VW installed software on its diesel vehicles that enabled the engines to turn on pollution controls during emissions tests and then to switch them off while driving to improve road performance. The executives decided to cheat, officials said, because they could not design an engine that would meet strict pollution standards and still attract customers.

The scheme resulted, federal officials said, in the cars’ pumping out nitrogen oxide at levels 40 times higher than permitted under federal law from 2009 through last year. 

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UPDATES:

2:20 p.m.: This article was updated with staff reporting.

11:15 a.m.: This article was updated with additional details, comment from Atty. Gen. Loretta Lynch and background information.

This article was originally published at 10:45 a.m.

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