On Friday, embattled German automaker Volkswagen AG VLKAY plead guilty in a United States court to criminal felony charges related to government emissions tests. This is part of a $4.3 billion settlement reached with the Justice Department in January over its diesel emissions scandal. The scandal has cost the company tens of billions of dollars in penalties and settlements.
Volkswagen plead guilty in a Detroit federal court on conspiracy charges to defraud the U.S.; to commit wire fraud and violate the Clean Air Act; obstruction of justice; and import violations. The automaker’s plea agreement includes a $2.8 billion fine, as well as resolves a longstanding probe by the Justice Department.
Volkswagen also agreed to pay an additional $1.5 billion civil penalty to settle the U.S. investigation, which is on top of previous civil settlements with regulators, consumers, dealers, and state attorneys general that could cost the German automotive giant over $20 billion.
The Environmental Protection Agency disclosed the scandal back in September of 2015; the agency said the company cheated on emissions tests for at least six years, and that Volkswagen’s vehicles spewed toxic tailpipe emissions up to 40 times above allowable levels. Volkswagen admitted to installing problematic software in about 11 million vehicles globally, which led to government hearings and investigations targeting many of its senior executives.
U.S. District Judge Sean Cox accepted the company's guilty plea.
Assistant U.S. attorney John Neal told the court that the emissions scheme "was a well thought-out, planned offense that went to the top of the organization."
"Volkswagen deeply regrets the behavior that gave rise to the diesel crisis. 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," the company said in a statement. "Volkswagen today is not the same company it was 18 months ago."
Volkswagen investors were expecting a guilty plea, and VLKAY stock closed the day up 1.15% to $30.67 per share. Currently, Volkswagen is a #1 (Strong Buy) on the Zacks Rank.
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