US court approves VW’s $4.3bn emissions penalty

A US federal judge on Friday ordered Volkswagen to pay $2.8bn in criminal fines, as he approved a settlement that saw the German carmaker plead guilty six weeks ago to rigging emissions tests.

The world’s largest carmaker pleaded guilty on March 10 in Detroit to three felonies relating to a decade-long conspiracy to bypass US pollution standards.

VW had admitted in September 2015 that it equipped more than half a million US cars with software to cheat emissions tests, while in reality some emitted up to 40 times the permitted standard. In January the carmaker agreed to pay $4.3bn, comprising a $2.8bn criminal fine and a $1.5bn civil fine.

“This is a very substantial penalty,” said Doug Parker, former chief investigator for the Washington-based Environmental Protection Agency, who led the VW probe from September 2015 until his retirement in March 2016.

“I hope it makes a meaningful difference in compliance in this sector,” he added. “That’s what enforcement is all about. But time will tell if others got the message.”

The carmaker has set aside a total of €23bn for the scandal, which covers fines, penalties as well as restitution to car owners and dealers, mostly in the US, where the cheating was uncovered by the EPA.

Judge Sean Cox, who called the cheating “a case of deliberate and massive fraud”, assigned Larry Thompson to be an independent monitor to oversee VW for a probationary period of three years.

Mr Thompson is best known as President George W Bush’s deputy attorney-general. He also served as general counsel for PepsiCo and taught corporate responsibility law at University of Georgia School of Law.

Hiltrud Werner, VW’s head of integrity and legal affairs, welcomed the appointment of Mr Thompson and said the carmaker has already “taken significant steps to strengthen accountability, enhance transparency and build a better company”.

Judge Cox rejected a motion calling for specific restitution to victims, saying they had already been covered by a consumer settlement last year in which VW agreed to buy back or modify the US cars involved in the scandal.

Manfred Döss, VW’s general counsel, expressed remorse for the company’s conduct. “Volkswagen today is not the same company it was 18 months ago,” he told the judge. “The change process under way is the biggest in our history.”

The carmaker has acknowledged that up to 9m cars in Europe were equipped with similar software, but VW has argued the installation did not breach EU laws and it has resisted calls for consumer payments.