Daily Management Review

$14.7 billion deal in VW Diesel Scandal Approved by U.S. Judge


10/26/2016




$14.7 billion deal in VW Diesel Scandal Approved by U.S. Judge
Even as the German automaker Volkswagen AG said it would begin buying back polluting cars in mid-November, its $14.7 billion deal arising from its diesel emissions cheating scandal and one of the biggest corporate settlements on record, was approved by a U.S. judge.
 
In a pivotal moment for the world's No. 2 automaker as it tries to move past a scandal that has engulfed it for more than a year, VW's settlement with federal and California regulators and the owners of the 475,000 polluting diesel vehicles was signed off by U.S. District Judge Charles Breyer in San Francisco.
 
IN September 2015, VW admitted that to cheat exhaust emissions tests and make them appear cleaner in testing than they really were, it had installed secret software in its diesel cars. Up to 40 times the legally allowable pollution levels were emitted by the vehicles in reality.
 
Breyer's approval was "an important milestone for us on the way towards clearing up the problem that we caused some time ago," Volkswagen CEO Matthias Mueller told reporters in Berlin. Pledge to carry out the terms "as seamlessly as possible”, was made by Hinrich Woebcken, president and CEO of Volkswagen Group of America.
 
Claiming that the settlement "adequately and fairly compensates" them, Breyer turned away objections from car owners who thought the settlement did not provide enough money. Owners will get $5,100 to $10,000 in compensation in addition to the pre-scandal "trade in" value of the vehicle.
"Given the risks of prolonged litigation, the immediate settlement of this matter is far preferable," Breyer wrote.
 
$4.7 billion on programs to offset excess emissions and to boost clean-vehicle projects and up to $10.033 billion on the buybacks and owner compensation was agreed to be spent by Volkswagen.
 
A class action lawsuit against VW was filed by vehicle owners the U.S. Justice Department, Federal Trade Commission, the state of California and the settlement was reached between these parties. Volkswagen still faces an ongoing criminal investigation as it has admitted to misleading regulators. The largest civil settlement worldwide ever reached with an automaker accused of misconduct was represented by the settlement.
 
Compared to the $53 billion by BP to address costs and penalties arising from the 2010 Gulf of Mexico oil spill and the $246 billion settlement reached by cigarette makers with 46 U.S. states in 1998, this approved deal was still smaller even while being huge.
 
Including payments to dealers, states and attorneys for owners, Volkswagen has agreed to date to spend up to $16.5 billion in connection with the scandal in total. The scandal harmed VW’s reputation, prompted the ouster of its CEO and rattled its global business.
 
The Audi A3 cars from the 2009 through 2015 model years, 2.0-liter polluting diesel Beetle, Golf, Jetta and Passat are covered in the settlement. Since some vehicles had multiple owners, up to 490,000 people will take part in the settlement.
 
The automaker expects to begin buying back vehicles in mid-November, said Volkswagen spokeswoman Jeannine Ginivan. To handle buybacks, 900 people, including one to be stationed at each dealership, have been by VW.
 
(Source:www.reuters.com) 






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