(Adds closing share price, details, background)
By Nick Carey and David Shepardson
DETROIT/WASHINGTON, March 10 Volkswagen AG
pleaded guilty on Friday to fraud, obstruction of
justice and falsifying statements as part of a $4.3 billion
settlement reached with the U.S. Justice Department in January
over the automaker's diesel emissions scandal.
It was the first time the company has pleaded guilty to
criminal conduct in any court in the world, a company spokesman
said, and comes as the automaker strives to put the most
expensive ever auto industry scandal behind it.
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 prompted massive bills.
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 offered to buy back about
500,000 polluting U.S. vehicles.
Volkswagen's general counsel Manfred Doess made the plea on
its behalf after he said at a hearing in U.S. District Court in
Detroit that he was authorized by the company's board of
directors to enter a guilty plea.
"Your honor, VW AG is pleading guilty to all three counts
because it is guilty on all three counts," Doess told the court.
U.S. District Judge Sean Cox accepted the company's guilty
plea to conspiracy to commit fraud, obstruction and entry of
goods by false statement charges and set an April 21 sentencing
date, where he must decide whether to approve the terms of the
Investors in VW stock took the news in stride after the
expected guilty plea, sending shares up slightly in Germany to
close up 0.3 percent at 143.70 euros.
VW has agreed to spend up to $10 billion to buy back diesels
that emit up to 40 times legally allowable pollution, along with
at least $5,100 per owner in additional compensation.
Cox said he was considering a motion made by a lawyer for
some owners on whether to allow additional restitution for
"This a very, very, very serious crime. It is incumbent on
me to make a considered decision," Cox said.
The Justice Department and VW have argued that the automaker
has already agreed to significant restitution.
"Volkswagen deeply regrets the behavior that gave rise to
the diesel crisis. The agreements that we have reached with the
U.S. government reflect our determination to address misconduct
that went against all of the values Volkswagen holds so dear,"
the company said in a statement. "Volkswagen today is not the
same company it was 18 months ago."
Under the plea agreement, VW agreed to sweeping reforms, new
audits and oversight by an independent monitor for three years
after admitting to installing secret software in 580,000 U.S.
vehicles. The software enabled it to beat emissions tests over a
six-year period and emit up to 40 times the legally allowable
level of pollution.
An assistant U.S. attorney, John Neal, told the court that
the emissions scheme "was a well thought-out, planned offense
that went to the top of the organization." He said VW could have
faced $17 billion to $34 billion in fines under sentencing
Volkswagen agreed to change the way it operates in the
United States and other countries under the settlement. VW, the
world's largest automaker by sales, in January agreed to pay
$4.3 billion in U.S. civil and criminal fines.
The company still faces ongoing investigations stemming from
the excess emissions by the U.S. Securities and Exchange
Commission, Internal Revenue Service and some U.S. states. New
York Attorney General Eric Schneiderman told Reuters last month
that there have been recent settlement talks, but didn't
The German automaker halted sales of diesel vehicles in late
2015 and has said it has no plans to resume sales of new U.S.
The Justice Department also charged seven current and former
VW executives with crimes related to the scandal. One executive
is in custody and awaiting trial and another pleaded guilty and
agreed to cooperate. U.S. prosecutors said in January that five
of the seven are believed to be in Germany. They have not been
German prosecutors also have an ongoing criminal probe into
VW's excess diesel emissions.
VW Chairman Hans Dieter Poetsch said Monday the company
expects to broaden disciplinary action beyond the two dozen
employees it has already suspended.
As part of its U.S. emission settlements, VW agreed to spend
nearly $3 billion to offset excess emissions and make $2 billion
in investments in zero emission vehicle infrastructure and
awareness programs over a decade.
(Writing by David Shepardson in Washington. Additional
reporting by Jan C. Schwartz in Hamburg, Germany; Editing by