Volkswagen pleads guilty in US, trouble looms in Europe

It agreed to pay $4.3 bn in civil and criminal penalties in case brought by Justice Department

Volkswagen took a big step toward resolving its legal problems in the United States when it pleaded guilty on Friday to its vast emissions deception. But in Europe, its troubles may be just beginning.

Across the continent, the German carmaker faces not only an expanding criminal investigation but also thousands of lawsuits from consumers demanding recourse.

An Irish nurse wants compensation for the plunging value of her Volkswagen diesel car. Lawyers in London have filed the British version of a class-action suit. And a German seafood supplier claims it was tricked into believing it was going green by shipping shrimp and cod to market in a fleet of Volkswagen “clean diesel” vehicles.

The lawsuits are a potentially costly unknown, since there are far more diesel car owners in Europe than in the United States — and they only add to Volkswagen’s ballooning legal bill, which has weighed on profits and shaken management ranks. 

Already, Volkswagen has paid heavily for its crimes, as the American government has tried to take a tougher approach to corporate wrongdoing. After being accused of treating Wall Street too gingerly in the wake of the 2008 financial crisis, the Justice Department, under the Obama administration, pushed in its final months to hold more companies and corporate executives accountable.

Volkswagen, which admitted to equipping cars with software to cheat emissions tests, has been a prime example of the aggressive new posture. The company formally pleaded guilty in a Detroit courtroom on Friday to federal charges that included conspiracy to violate the Clean Air Act and obstruction of justice. Six executives have so far been charged in the United States, and one engineer has pleaded guilty to conspiring to defraud regulators and car owners.

It is too soon to tell whether the new attorney general, Jeff Sessions, will adopt the same approach as the previous administration. Separately, the fate of the executives’ cases is unclear, since five of the six people indicted are believed to be in Germany, which does not usually extradite its citizens outside the European Union.

But Volkswagen’s exposure in the United States has already dwarfed previous cases for vehicle manufacturers in pollution cases and safety malfunctions. Volkswagen agreed to pay $4.3 billion in civil and criminal penalties in the case brought by the Justice Department. It was just a piece of the overall $22 billion in settlements and fines in the United States. “Volkswagen deeply regrets the behavior that gave rise to the diesel crisis,” the company said in a statement. “The agreements that we have reached with the US government reflect our determination to address misconduct that went against all of the values Volkswagen holds so dear.”

General Motors, by comparison, paid $2 billion in fines and civil settlements over faulty ignition switches that left more than 100 dead. No executives were charged in the matter.

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