U.S. officials indicted six executives at German automaker Volkswagen on Wednesday in connection with the company's scheme to deliberately deceive U.S. regulators about the emissions standards of its diesel-engine vehicles and sell those cars illegally to American drivers.
Five of the six executives, at least some of whom were described as high-ranking, are currently in Germany. Attorney General Loretta Lynch said it was too soon to say how that will affect legal proceedings moving forward. The sixth executive was arrested and charged in Miami earlier this week.
Additional executives at the company are being investigated and could face charges, Lynch said.
Volkswagen agreed Wednesday to plead guilty to three criminal counts, a rare admission of wrongdoing for a major company, and pay US$4.3 billion ($6b) in criminal and civil fines in a settlement with the Justice Department.
"As you all know we cannot put companies in jail, but we can hold their employees personally accountable and we can force companies to pay hefty fines," said FBI Deputy Director Andrew McCabe.
"This is really a reflection of the fact that faceless multinational corporations don't commit crimes, flesh-and-blood people commit crimes," added Sally Yates, deputy attorney general. "And we've sharpened our focus to ensure that we're doing everything from the very beginning of an investigation . . . to hold those individuals accountable and build out from there."
GM and Toyota both incurred steep fines from the Justice Department in recent years that were connected to safety defects that caused human fatalities. Neither company faced criminal charges or admitted to wrongdoing. Officials said Wednesday that the Volkswagen case stood out because the deception lasted 10 years and involved senior managers.
"This is a company where lower-level people actually expressed concern along the way about the fact that these defeat devices were being used and questioned whether they should be used, and higher-up people decided to keep using them," said Assistant Attorney General Leslie Caldwell.
"We don't really see many major multinational corporations that decide at a very high level . . . to violate U.S. law in a systematic way for nearly a decade," she added.
The six executives face charges of conspiracy to defraud the United States and American consumers and violation of the U.S. Clean Air Act. Those indicted include Heinz-Jakob Neusser, 56, Jens Hadler, 50, Richard Dorenkamp, 68, Bernd Gottweis, 69, Oliver Schmidt, 48, and Jürgen Peter, 59, all of Germany. Schmidt was arrested and charged this week in Miami.
All of the accused have ties to Volkswagen's engine development and quality assurance divisions, both in the United States and Germany. According to the Justice Department, Hadler and Dorenkamp directed employees to develop and install the technology to evade emissions testing. The accused then marketed the car engines as "clean diesel" knowing that they did not meet U.S. standards. Peter also served as one of Volkswagen's liaisons with regulators in 2015.
A spokesman for Volkswagen declined to disclose the employment status of the six indicted individuals, citing a policy not to discuss ongoing investigations or personnel matters.
Hans Dieter Pötsch, who chairs the company's supervisory board, said in a statement: "When the diesel matter became public, we promised that we would get to the bottom of it and find out how it happened - comprehensively and objectively. . . . We are no longer the same company we were 16 months ago."
Indeed, Volkswagen shed several top executives and implemented other internal changes after the emission scandal came to light. The company also apologized to U.S. lawmakers and pledged to regain the trust of American consumers. The Justice Department said those actions helped the company avoid even steeper penalties.
A judge must now approve the settlement before it's made official. That court date has not been set, a Justice Department spokesman said.
"Today's settlement provides a textbook case about how the Justice Department should address egregious wrongdoing by corporations," said David Uhlmann, a University of Michigan law professor who served as head of the agency's environmental crimes section from 2000 to 2007. " Too often, justice comes up short in corporate crime prosecution but not in the VW case."
University of Richmond law professor Carl Tobias agreed that the Volkswagen settlement sends a message to other companies that illegal conduct can come with harsh penalties. But how the remaining aspects of the investigation are resolved, particularly the outstanding indictments, will depend on Donald Trump's incoming administration.
"Numerous questions remain, such as who else at VW might be prosecuted, whether the five [in Germany] can be brought to justice, whether VW's behavior will improve, etc.," Tobias said. "The answers may depend on whether the new administration will continue pursuing VW as rigorously as the present administration has."
Volkswagen is charged with conspiring to defraud the government and violate environmental regulations from May 2006 to November 2015 by installing devices in its diesel engine vehicles that obscure the amount of nitrogen oxide they spew into the air. Those devices and accompanying software allowed Volkswagen to evade regulators for years, the Justice Department asserts.
However, Volkswagen falsely claimed that its vehicles met all environmental regulations in order to import and sell the affected models in the United States from 2009 to 2015, according to the charges. In all, the emissions-cheating scandal touched 11 million vehicles worldwide, including more than half a million sold in the United States.
When U.S. officials finally caught on, Volkswagen "did corruptly alter, destroy, mutilate and conceal business records" in order to obstruct the investigation, charging documents declare. In August and September 2015, a Volkswagen supervisor is accused of deleting emails and files related to the deceptive device and instructing employees to do the same, charging documents show.
A portion of the penalty announced Wednesday will settle three civil complaints that Volkswagen violated environmental, customs and finance laws as part of its deception.
Wednesday's announcement will bring Volkswagen's total fines to roughly US$20b. The largest of those penalties was the US$14.7b the company was ordered to pay to buy back cars and otherwise compensate customers affected by the scandal.