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'Dieselgate' deal could put VW staff in hot seat

Industry news

Detroit, Michigan - The imminent criminal plea deal between Volkswagen and US prosecutors in the 'Dieselgate' emissions-cheating scandal could be bad news for one group of people: VW employees who had a role in the deceit or subsequent cover-up.

Volkswagen disclosed on Tuesday that it was in advanced talks to settle the criminal case by pleading guilty to unspecified charges and paying $4.3 billion (R59 billion) in criminal and civil fines, a sum far larger than any recent case involving the automotive industry.

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Emails between employees and company executives should help prosecutors reach as far up VW's organisational chart as the scandal goes.

David Uhlmann, former head of the Justice Department's environmental crimes section, who is now a University of Michigan law professor, said it was likely Volkswagen would agree to cooperate with the probe, turning over documents and other information.

"Companies often face the dilemma of whether to protect their employees or cooperate with government investigations,"he said, "but almost always end up deciding in the company's best interest to share what information they have."

Although Volkswagen's communications with its lawyers may be exempt, emails between employees and company executives should help prosecutors reach as far up VW's organisational chart as the scandal went, he said. Prosecutors now have three witnesses giving them information and have arrested Oliver Schmidt, Volkswagen's former head of US environmental compliance, who dealt with the EPA and California Air Resources Board after the scandal was uncovered.

Uhlmann said the cooperation of witnesses and the company should help investigators determine whether the scandal went beyond Volkswagen's engineers, but extraditing any executives from Germany would be a problem.

'Defeat device'

Volkswagen has admitted to fitting diesel cars with sophisticated software that turned on emissions controls when engines were being tested by the Environmental Protection Agency, then turned them off during normal driving. The software, called a "defeat device" because it defeated the emissions controls, improved engine performance but spewed out harmful nitrogen oxide at up to 40 times the legal limit.

Volkswagen has reached a $15 billion (R206 billion) civil settlement with environmental authorities and car owners in the US under which it agreed to buy back as many as 500 000 vehicles. The company also faces an investor lawsuit and criminal probe in Germany. In all, about 11 million vehicles worldwide were fitted with the software.

The criminal investigation is likely to continue into the administration of president-elect Donald Trump and his attorney general nominee, senator Jeff Sessions, but Uhlmann, who served under Republican and Democratic attorneys general, doesn't think the new administration will back off from the Volkswagen prosecution.

"All administrations want to be tough on crime, including corporate crime," he said. "I doubt the Trump administration will be any different."

A draft of the Volkswagen settlement with the government calls for the appointment of an independent monitor to oversee compliance and control measures for three years. The draft still must be approved by Volkswagen's board and US courts.

The scandal was revealed in September 2015, when West Virginia University tested on-road diesel emissions. The EPA issued a notice of violation, and Volkswagen apologised and brought in US law firm Jones Day to investigate.

If finalised, the $4.3 billion settlement would eclipse Toyota's $1.2 billion (R16.5 billion) penalty for unintended acceleration problems as well as General Motors' $900 million (R12.4 billion) payment to resolve a deadly ignition-switch scandal.

AP

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