U.S. judge hands Volkswagen three-year probation sentence

Man uses phone under VW logo at the auto show in Shanghai
A man uses phone under a Volkswagen logo at the Shanghai Auto Show, in Shanghai, China April 20, 2017. REUTERS/Aly Song

April 21, 2017

By Nick Carey

DETROIT (Reuters) – A federal judge in Detroit on Friday sentenced Volkswagen AG to three years’ probation over the German automaker’s diesel emissions scandal as part of a $4.3 billion settlement announced in January.

“This is a case of deliberate and massive fraud,” U.S. District Judge Sean Cox said in approving the settlement that requires the automaker to make significant reforms. He also formally approved a $2.8 billion criminal fine as part of the sentence.

“This is a very serious and very troubling case involving an iconic automobile company,” Cox added. “I just can’t believe VW is in the situation it finds itself in today.”

The September 2015 disclosure that VW intentionally cheated on emissions tests for at least six years led to the ouster of its chief executive, damaged the company’s reputation around the world and resulted in massive fines and pay-outs.

The German automaker pleaded guilty in March to fraud, obstruction of justice and falsifying statements after admitting to installing secret software in 580,000 U.S. vehicles. Speaking on behalf of Volkswagen, general counsel Manfred Doess said the company “deeply regrets the behavior that gave rise to this case.

“Plain and simple, it was wrong,” Doess said.

The plea agreement calls for “organization probation,” which allows for the company to be overseen by an independent monitor for three years.

At the sentencing hearing, a federal prosecutor confirmed that the government plans to name former Deputy U.S. Attorney General Larry Thompson to serve as the independent monitor.

Reuters first reported Thompson’s expected hiring on Wednesday.

An assistant U.S. attorney, John Neal, told the court that Thompson has assembled a team of experts, including some familiar with German law. He added that the U.S. government “has a great deal of confidence that (Thompson) will ensure compliance with all the terms” of the plea agreement.

In total, VW has agreed to spend up to $25 billion in the United States to address claims from owners, environmental regulators, states and dealers and to make buy-back offers.

(Reporting by Nick Carey in Detroit and David Shepardson in Washington; Editing by Dan Grebler)

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