Volkswagen Reaches Additional $1.2 Billion “Dieselgate” Settlement, But Criminal Investigation Looms Large

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Last Tuesday, U.S. District Court Judge Charles Breyer gave his initial approval of a $1.22 Billion settlement of lawsuits brought by a class of consumers who purchased 80,000 Volkswagen 3.0 liter diesel vehicles. This initial approval follows a prior settlement for smaller-engined 2.0 liter diesels that will provide more than $14 Billion of value to consumers.

These settlements will end class action litigation on behalf of consumers who allege that Volkswagen secretly equipped its diesel vehicles with software designed to skirt emissions regulations. This software “defeat device” was designed to reduce the vehicles’ emissions during testing to pass federal emissions standards, but allow the vehicles to spew illegal amounts of pollutants while on the road. The discovery of these defeat devices has haunted Volkswagen for over a year, including scores of civil lawsuits and criminal investigations.

But while Volkswagen has reached deals designed to end the civil lawsuits against it in the U.S., the criminal investigation of Volkswagen’s executives looms large. In January, the FBI arrested Volkswagen executive Oliver Schmidt, who ran the company’s regulatory compliance office, for his role in the scandal. One Volkswagen engineer has already pleaded guilty to criminal charges.

Recently, former Volkswagen group chairman, Ferdinand Piëch, told German authorities that he learned of the emissions cheating as early as February of 2015, and that he reported this knowledge to Volkswagen Group’s supervisory board. This statement contradicts the prior story of Volkswagen’s board members, who have stated they did not learn of the cheating until September of 2015. The board members have strongly condemned Piëch’s story, but this apparent contradiction could indicate a cover-up at Volkswagen’s highest levels. Investigations continue, and despite the large amounts of money to be paid in civil settlements, Volkswagen’s legal troubles are far from over.

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