June 13, 2018 / 4:00 PM / in 6 days

Volkswagen fined one billlion euros by German prosecutors over emissions cheating

BERLIN (Reuters) - Volkswagen (VOWG_p.DE) was fined one billion euros ($1.18 billion) over diesel emissions cheating in what amounts to one of the highest ever fines imposed by German authorities against a company, public prosecutors said on Wednesday.

FILE PHOTO: Mechanic staff work on the production line of Volkswagen e-Golf in the Glaeserne Manufaktur plant in Dresden, Germany May 8, 2018. REUTERS/Matthias Rietschel/File Photo

The German fine follows a U.S. plea agreement from January 2017 when VW agreed to pay $4.3 billion to resolve criminal and civil penalties for installing illegal software in diesel engines to cheat strict U.S. anti-pollution tests.

“Following thorough examination, Volkswagen AG accepted the fine and it will not lodge an appeal against it. Volkswagen AG, by doing so, admits its responsibility for the diesel crisis and considers this as a further major step toward the latter being overcome,” it said in a statement.

The fine is the latest blow to Germany’s auto industry which cannot seem to catch a break from the diesel emissions crisis. Germany’s government on Monday ordered Daimler to recall nearly 240,000 cars fitted with illicit emissions-control devices, part of a total of 774,000 models affected in Europe as a whole.

Munich prosecutors this week widened an emissions cheating probe into VW’s luxury brand Audi to include Chief Executive Rupert Stadler among the suspects accused of fraud and false advertising.

The prosecutor’s office in Braunschweig imposed the fine against VW on Wednesday for organizational deficiencies which failed to prevent “impermissible software functions” from being installed in 10.7 million cars between 2007 and 2015.

The fine did not address any civil claims or claims by vehicle owners, the prosecutor’s office said in its statement. It does, however, end regulatory offence proceedings against Volkswagen, which the Wolfsburg-based carmaker said would help to settle further administrative proceedings against VW in Europe.

STRONG CASH POSITION

VW shares closed 0.1 percent higher at 159.78 euros.

VW is far from being out of the woods. The carmaker’s new chief executive, Herbert Diess, and the group’s chairman Hans Dieter Poetsch are still being investigated by Braunschweig prosecutors for suspected market manipulation.

Poetsch, also CEO of VW’s majority stakeholder Porsche SE (PSHG_p.DE), is separately being investigated by prosecutors in Stuttgart over the same suspicions.

“Courts will now hardly be able to dismiss consumer complaints,” said Jan-Eike Andresen of platform MyRight which has mandated U.S. law firm Hausfeld to pursue civil claims.

Hausfeld represents aggrieved VW owners and shareholders on both sides of the Atlantic.

Wednesday’s fine was not included in the 25.8 billion euros of provisions that VW set aside for the diesel cheating scandal, and would hit earnings, analysts at Evercore ISI said.

Volkswagen said it held a management board meeting to discuss the latest development in its emissions crisis with members of the supervisory board also being informed.

Further steps would be taken to overcome the diesel cheating scandal and to restore trust in the company, Diess said.

Finance chief Frank Witter will update investors on Aug. 1 on the implications of the fine for the carmaker’s cash position, alongside its second-quarter results, VW said.

“Paying out 1 billion euros is extreme painful but in the broader context it isn’t a material number,” Evercore ISI analyst Arndt Ellinghorst said, citing VW’s 24.3 billion-euro net cash position after the first quarter.

Reporting by Edward Taylor and Andreas Cremer; Editing by Edmund Blair and Elaine Hardcastle

0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below