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Volkswagen agrees to $4.3bn settlement with US DoJ over Dieselgate

Wednesday, January 11, 2017 12:05
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Volkswagen (FRA:VOW, OTC:VLKAY) agreed to an as-reported $4.3bn settlement to resolve the US government’s civil and criminal investigations into the German automaker’s diesel emissions cheating on Wednesday.

Volkswagen had previously agreed to spend up to $17.5bn in the United States to resolve claims by US regulators, owners and dealers and offered to buy back nearly 500,000 polluting vehicles. The automaker was in intense talks with regulators in recent weeks in an effort to reach a deal before the end of the Barack Obama administration on January 20.

US Attorney General Loretta Lynch and Environmental Protection Agency chief Gina McCarthy will announce the settlement in Washington on Wednesday at a news conference, the government said in a statement.

VW’s supervisory board met today to approve the deal, which will also see the company admit criminal misconduct over software that masked the amount of gases pumped out by its cars.

On top of earlier fines and compensation packages, the settlement means the scandal is estimated to cost Volkswagen more than £15.7bn ($19.2bn) in the United States alone.

Prosecutors may also charge additional individuals with criminal conduct as early as today.

Volkswagen’s New York-listed ADRs were up 2.9% at $32.37 on Wednesday.

Investors marked shares in Volkswagen higher as they hoped a settlement with the US authorities over diesel emission cheating might bring an end in sight to the disastrous incident.

The car company is in talks with the US Justice Department over an amount said to be around US$4.3bn.

In anticipation, shares in the car maker rose to their highest in Frankfurt since the scandal first broke in 2015.

VW’s supervisory board was meeting today to discuss the settlement.

So far the scandal has cost the company €16bn before any additional US bill, which could yet rise further as there are still lawsuits in Europe and elsewhere outstanding.

Reports today also suggested the US DoJ was also keen pursue all of the individual managers responsible for the scandal, which saw VW install cheat software on 11.000 diesel cars that enabled them to lower their emissions in a test environment.

Oliver Schmidt, the head of VW’s environmental and engineering office in Michigan, was charged this week with conspiracy to defraud.  

As part of the settlement, VW is expected to plead guilty to criminal misconduct.

The reports said the US DoJ would announce the details of the settlement later today.

Story by ProactiveInvestors


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