A federal judge ordered Volkswagen to pay the U.S. a $2.8 billion criminal penalty for orchestrating a massive fraud scheme in which the German automaker equipped 600,000 diesel vehicles with an emissions cheat.
The penalty is the largest ever negotiated between the U.S. government and an auto manufacturer, dwarfing the record and near-record fines paid by Toyota, General Motors, and airbag maker Takata in recent years.
“I just can’t believe that VW is in this situation that it finds itself in today,” said U.S District Judge Sean Cox in the April 21 hearing. He added that Volkswagen’s fraud was “very serious and troubling” for “an iconic automobile company.”
The criminal fine brings the cost of the VW emissions cheat scandal to some $30 billion, much of which is dedicated to buying back nearly half a million diesel-powered VW vehicles from owners.
The scandal centers on VW’s installation of a “defeat device” in vehicles with 2.0-liter diesel engines. The device allowed the vehicles to drive without any emissions control in normal, everyday driving but turn on pollution controls whenever the vehicle was subject to emissions testing. This gave car owners and regulators the impression that the vehicles were environmentally friendly when they were actually some of the worst polluters on the planet.
While Volkswagen buckles under the weight of the costly scandal, seven current and former VW executives face criminal charges in the U.S. for their own roles in the scandal. Additional charges could be brought in Germany as well, where an investigation of the matter continues.
“Who has been hurt by this corporate greed? From what I can see it’s not the managers at VW, the ones who get paid huge salaries and large bonuses. As always it’s the little guy,” Judge Cox said, referring to car buyers and VW’s own production workers who could have to sacrifice part of their pay as their employer seeks to recover its financial standing and its reputation.