Volkswagen Confirms $4.3 Billion False Advertising Emissions Settlement

By Patrick Coffee Comment

clean diesel

Volkswagen confirmed today that it has agreed to pay more than $4 billion to settle a dispute with the U.S. Department of Justice and U.S. Customs and Border Protection over “certain criminal investigations and certain civil fines in connection with the Diesel issue in the USA.”

The deal has not been finalized, and it remains subject to the approval of the “Management Board and the Supervisory Board of Volkswagen AG and by the competent corporate bodies of further Group Companies involved,” according to a release provided by VW’s communications team. Reuters and other news organizations reported that the case will end with a guilty plea, but VW has yet to address that directly before a meeting of the aforementioned board, which will occur “today, the 10 January 2017 or tomorrow, the 11 January 2017. ”

The statement concludes, “In case of a settlement agreement, the payment obligations are expected to lead to a financial expense that exceeds the current provisions. The concrete impact regarding the annual result 2016 cannot be defined at present due to its dependency on various further factors.”

This news follows yesterday’s revelation that former emissions compliance executive Oliver Schmidt had been arrested by the FBI while returning from vacation in Miami; here’s the document detailing the conspiracy charges to be filed against him. Former engineer James Robert Liang pled guilty to conspiracy charges last September.

Regarding the Schmidt case, a company spokesperson wrote, “Volkswagen continues to cooperate with the Department of Justice as we work to resolve remaining matters in the United States.  It would not be appropriate to comment on any ongoing investigations or to discuss personnel matters.”

VW’s U.S. agency of record Deutsch has declined to comment and consistently deferred to the client since news of the case first broke in fall of 2015.

One former Deutsch employee, however, recently told us that the shop had to defend its VW business last summer when the company brought a new marketing executive on-board in the midst of the investigation.

In what may be the most unexpected part of the story, more than one party tells us that surveys commissioned by Volkswagen have revealed ambivalence among consumers about the company’s admittedly false claims regarding “clean diesel.”

This despite the fact that FTC “secured $10 billion in compensation for the vast majority of consumers harmed by Volkswagen’s deceptive advertising” late last year and reached another agreement on violations of the EPA’s Clean Air Act last December.

America, it would seem, greets corporate controversy with a shrug.

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