LDN - Business

U.S. judge sentences Volkswagen to three years probation, oversight

[April 22, 2017] By Nick Carey

DETROIT (Reuters) - A federal judge in Detroit on Friday sentenced Volkswagen AG <VOWG_p.DE> to three years' probation and independent oversight for the German automaker's diesel emissions scandal as part of a $4.3 billion settlement announced in January.

The plea agreement called for "organization probation" in which the company would be overseen by an independent monitor.

The sentencing was one of the last major hurdles to VW moving past a scandal that led to the ouster of its chief executive and tarnished the company's reputation worldwide.

"This is a case of deliberate and massive fraud," U.S. District Judge Sean Cox said in approving the settlement that required the automaker to make significant reforms. He also formally approved a $2.8 billion criminal fine as part of the sentence.

As well as accepting the agreement reached between VW and the U.S. government, Cox rejected separate calls from lawyers representing individual VW customers for restitution.

The German automaker pleaded guilty in March to fraud, obstruction of justice and falsifying statements after admitting to installing secret software in 580,000 U.S. vehicles.

Since the September 2015 disclosure that VW intentionally cheated on emissions tests for at least six years, the company has agreed to spend up to $25 billion in the United States to address claims from owners, environmental regulators, states and dealers and to make buy-back offers.

Speaking on behalf of Volkswagen, general counsel Manfred Doess said the company "deeply regrets the behavior that gave rise to this case. Plain and simple, it was wrong," he said.

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An American flag flies next to a Volkswagen car dealership in San Diego, California September 23, 2015. REUTERS/Mike Blake/File Photo

The U.S. Department of Justice announced Friday it had selected former Deputy U.S. Attorney General Larry Thompson to serve as the company's independent monitor.

In a statement New York City Comptroller Scott M. Stringer, who oversees investments in Volkswagen on behalf of the New York City Pension Funds, said VW's "scheme was deceitful." "Today’s massive fine underscores the extent of the fraud and the need for change at the company."

The U.S. Justice Department has charged seven current and former VW executives with crimes related to the scandal. One executive is in custody and awaiting trial and another pleaded guilty and agreed to cooperate. U.S. prosecutors said in January that five of the seven are believed to be in Germany. They have not been arraigned.

German prosecutors also are conducting a criminal probe of VW's excess diesel emissions.

"We have worked tirelessly to address the misconduct that took place within our company and make things right for our affected customers," the company said in a statement on Friday. "Volkswagen today is not the same company it was 19 months ago."

(Reporting by Nick Carey in Detroit and David Shepardson in Washington; Editing by Dan Grebler and Andrew Hay)

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