By cooperating with federal investigators and quickly agreeing to compensate car owners, Volkswagen likely will avoid a massive criminal fine for cheating on diesel emissions tests and trying to cover it up.
The company on Friday pleaded guilty to obstruction of justice and conspiracy over a brazen scheme to program nearly 600,000 vehicles to deceive the Environmental Protection Agency.
VW also agreed to pay $4.3 billion in criminal and civil penalties. While that is the largest-ever fine imposed by the U.S. government on an automaker, the company could have been on the hook for much more.
Federal sentencing guidelines called for fines from $17 billion to $34 billion due to the size of the plot and because VW employees destroyed documents and data after learning of the government investigation.
The crimes were well-planned and "went to a very high level in the corporate structure," Assistant U.S. Attorney John Neal told the court.
VW won't know its punishment for sure until sentenced April 21 by U.S. District Judge Sean Cox in Detroit. But prosecutors said that VW got a big discount on the penalty because it cooperated after fessing up to the crime.
The automaker's general counsel, Manfred Doess, who was in court to agree to the plea, acknowledged the scheme lasted for nine years, from 2006 to 2015, and went to the level of just below the company's management board.
VW attorney Jason Weinstein said VW's cooperation enabled U.S. authorities to quickly file charges against six German supervisors in the case. Only one is in U.S. custody, though, and it's unlikely the others will be extradited from Germany. One U.S. employee also was charged.
"I've never seen a company act more swiftly or aggressively to hold itself accountable for what it did wrong," Weinstein, a former federal prosecutor, told the court.
VW agreed to compensate owners for more than they would have received under criminal statutes, Neal said. Car owners combined will get up to $11 billion for vehicle buybacks and compensation as part of a civil settlement agreed to last year. The company also agreed to environmental remediation and electric vehicle investment, and its behavior will be watched by a monitor for three years.
Although both sides asked Cox to sentence VW on Friday, Cox said he wanted more time to study the terms of the punishment — including a $2.8 billion criminal fine. If Cox rejects the recommendation, VW can withdraw its plea. If the company wants to stick with a guilty plea, Cox still could order harsher penalties.
An attorney for 300 VW owners who have opted out of a larger court settlement objected to the penalty, contending that owners should get restitution through the criminal court. But the Justice Department and VW argued that the $11 billion in restitution VW agreed to give owners in the civil lawsuit was sufficient. That was part of a $15 billion settlement with U.S. environmental authorities and car owners approved last year.
VW's total cost of the scandal now has been pegged at more than $21 billion. Although the cost is staggering and would bankrupt many companies, VW has the money, with $33 billion in cash on hand.
After the hearing, Weinstein said he wasn't surprised that Cox delayed the sentencing because a presentence report is typical in criminal cases. He also said Cox wanted more time to consider the objection. He's optimistic the judge will accept the negotiated deal.
U.S. regulators confronted VW about the software after West Virginia University researchers discovered differences in testing and real-world emissions of harmful nitrogen oxide. VW later admitted that the cars were programmed to turn pollution controls on during testing and off while on the road.