Braunschweig prosecutor imposes €1B fine against Volkswagen over diesel crisis

14 June 2018

The public prosecutor in Braunschweig, Germany, issued an administrative order against Volkswagen AG in the context of the diesel crisis. The order provides for a fine of €1 billion in total, consisting of the maximum penalty as legally provided for of €5 million and the disgorgement of economic benefits in the amount of €995 million. The order was issued under the authority of the German Act on Regulatory Offenses.

According to the findings of the investigation carried out by the Braunschweig public prosecutor, monitoring duties had been breached in the VW Powertrain Development department in the context of vehicle tests. According to the results obtained by the prosecutor, 10.7 million diesel vehicles in total with the EA 288 (Gen3) engines (in the United States and in Canada) and EA 189 engines (worldwide) were being advertised, sold to customers, and placed on the market with an impermissible software function in the period from mid-2007 until 2015.

Volkswagen accepted the fine and will not appeal the order—said the company. By doing so, Volkswagen admits its responsibility for the diesel crisis and considers this as a further major step towards the latter being overcome. As a result of the administrative order imposing the fine, the active regulatory offense proceedings conducted against Volkswagen will be finally terminated. Volkswagen assumes that such termination of the proceedings will also have significant positive effects on further active administrative proceedings in Europe against the Volkswagen AG and its subsidiaries.

The €1B fine is the first penalty imposed on VW over the diesel emissions crisis by European authorities. While a significant penalty, the €1B fine pales in comparison to the $4.3 billion penalty and other costs—totaling more than $20 billion—incurred by VW in connection with the diesel crisis in the United States.

Further penalties against VW Group and other companies involved in the diesel crisis may be still following. According to recent media reports, the Stuttgart prosecutors’ office has been considering penalties against Daimler, Porsche and Bosch.

Source: Volkswagen