Volkswagen has agreed to plead guilty to US charges that it cheated on diesel emission tests for a decade.
It is also to pay $4.3bn (4bn euros) in criminal and civil penalties in one of the biggest clean air fines on an automaker ever.
The fines would have been larger if the company had not already spent $11bn (10.3bn euros) on addressing consumer vehicles.
JUST IN: Volkswagen pleads guilty, agrees to pay $4.3 billion in criminal and civil penalties over emissions scandal, DOJ says. pic.twitter.com/4mOUM0D5EZ— ABC News (@ABC) January 11, 2017
US Attorney General Loretta Lynch said the announcement did not mean the US investigation is complete: “We will continue to examine Volkswagen’s attempts to mislead consumers and deceive the government. We will continue to pursue the individuals responsible for orchestrating this damaging conspiracy.”
Six of VW’s former executives have been indicted for conspiracy. Five are in Germany and its unclear if they will ever come to the US to face charges. One of the six, Oliver Schmidt, who was a manager in charge of VW’s environmental and engineering office in Michigan was arrested in Florida while on holiday, on Saturday.
On Monday he was accused of conspiracy to defraud the US and charged with concealing the cheating from regulators.
There are still investor and consumer lawsuits pending in Europe.
VW admitted in September 2015 to installing secret software in hundreds of thousands of US diesel cars to cheat exhaust emissions tests and make them appear cleaner than when they were driven on the road. As many as 11 million vehicles were affected worldwide.
Reforms demand, bonuses questioned
The scale of wrongdoing connected with the scandal has led to Volkswagen investors demanding deep reforms and questioning executive bonuses.
“For senior management to receive any bonuses in 2017, we would now expect VW to deliver a dramatic improvement in profits,” said Ben Walker, partner at activist hedge fund TCI, which last year publicly criticised “corporate excess on an epic scale” at the carmaker.
“Seventeen billion euros of EBIT (earnings before interest and tax) should be the minimum amount for any bonus to be received by executive management. Below that, zero bonus,” he wrote in an email, noting VW’s admissions of guilt in the DoJ settlement did not extend to any board-level managers.
“What is most disturbing… is the pattern of deception, both in developing and perfecting the defeat devices, as well as deliberately obstructing the subsequent investigation,” said Annie Bersagel, an adviser for responsible investments at Norwegian Mutual Insurance company Kommunal Landspensjonskasse. KLP and KLP mutual funds have small investments in both VW equities and fixed income products.
“Going forward we would like to see more truly independent directors. This may change governance at the company where we see some issues, for example the awarding of large bonuses to current and former managers. We would like to see a clawback provision relating to violations.”
Ingo Speich, a fund manager at Union Investment which holds about 0.6 percent of VW preference shares, said on Wednesday the company needed to “put everything on the table” about its wrongdoing to regain the trust of investors.
For 2015, the year the scandal was uncovered, VW agreed to pay 12 current and former members of the management board at total of 63.2 million euros in fixed and flexible remuneration. It said board members would have 30 percent of their variable bonus withheld if the share price remained below 140 euros.