Justice! Crooked auto executive arrested
Six high-level Volkswagen employees from Germany have been indicted in the U.S. in the automaker's emissions-cheating scandal as prosecutors made good on efforts to charge individuals in a corporate corruption case.
Now, one is in handcuffs after flying into Miami for a luxurious vacation — and authorities say he's so corrupt, they fear letting him out on bail will result in him fleeing the country.
A detention hearing for 48-year-old Oliver Schmidt is scheduled Thursday in Miami, where he was arrested on an expensive vacation to the U.S. from Germany.
Prosecutors say Schmidt should remain jailed until the case is resolved because he might flee to Germany. Schmidt's lawyers insist he would remain in the U.S. if released.
The charges are part of the government case against VW for knowingly selling diesel vehicles that didn’t meet U.S. emissions standards. The company itself has agreed to plead guilty on the criminal case and pay a record $4.3 billion penalty.
In announcing the federal charges and a corporate plea bargain by VW, Justice Department prosecutors on Wednesday detailed a large and elaborate scheme inside the German automaker to commit fraud and then cover it up, with at least 40 employees allegedly involved in destroying evidence.
The company agreed to plead guilty to criminal charges and pay $4.3 billion — by far the biggest fine ever levied by the government against an automaker.
But prosecutors may have trouble bringing the executives to trial in the U.S. German law generally bars extradition of the country's citizens except within the European Union.
Still, the criminal charges are a major breakthrough for a Justice Department that been under pressure to hold individuals accountable for corporate misdeeds ever since the 2008 financial crisis.
U.S. authorities are still investigating just how high the scheme went, and held out the possibility of charges against more VW executives.
“We will continue to pursue the individuals responsible for orchestrating this damaging conspiracy,” Lynch said.
VW admitted installing software in diesel engines on nearly 600,000 VW, Porsche and Audi vehicles in the U.S. that activated pollution controls during government tests and switched them off in real-world driving. The software allowed the cars to spew harmful nitrogen oxide at up to 40 times above the legal limit.
U.S. regulators confronted VW about the software after university researchers discovered differences in testing and real-world emissions. Volkswagen at first denied the use of the so-called defeat device but finally admitted it in September 2015.
Even after that admission, prosecutors said, company employees were busy deleting computer files and other evidence.
The fines easily eclipse the $1.2 billion penalty levied against Toyota in 2014 over unintended acceleration in its cars. VW also agreed to pay an additional $154 million to California for violating its clean air laws.
The penalties bring the cost of the scandal to VW in the United States to nearly $20 billion, not counting lost sales and damage to the automaker's reputation. Volkswagen previously reached a $15 billion civil settlement with U.S. environmental authorities and car owners under which it agreed to repair or buy back as many as a half-million of the affected vehicles.
Although the cost is staggering and would bankrupt many companies, VW has the money, with $33 billion in cash on hand.
As for why the fine was so big, “the premeditation here was very significant and that was at a very high level in the company,” said Leslie Caldwell, an assistant U.S. attorney general.
“Lower-level people actually expressed concern along the way about the fact these defeat devices were being used and questioned whether they should be used. And higher-up people decided to use them,” Caldwell said. “Volkswagen also lied to the regulators and the Department of Justice once our investigation had started. That's what distinguishes this.”
Volkswagen pleaded guilty to conspiracy, obstruction of justice and importing vehicles by using false statements. Under the agreement, VW must cooperate in the investigation and let an independent monitor oversee its compliance for three years.
The six supervisors indicted by a federal grand jury in Detroit were accused of lying to environmental regulators or destroying computer files containing evidence.
The Associated Press contributed to this article