Volkswagen close to $4.3bn US emissions settlement

Volkswagen has confirmed it is in advanced stages of negotiating a $4.3 billion (€4.07bn) settlement with US regulators to resolve its diesel emissions issues, and plans to plead guilty to criminal misconduct as part of the civil and criminal settlement.

Volkswagen said that with the addition of the fine, the costs of handling the diesel scandal are now set to exceed the nearly €18.2 billion it has set aside to deal with the problem. VW also said it will face oversight by an independent monitor over the next three years. It said the supervisory board and the management board would meet, possibly on Wednesday, to approve the deal.VW is expected to plead guilty as part of the settlement as early as Wednesday. The company said it was in " advanced talks" on a settlement with the US authorities.

The company admitted in September 2015 to installing secret software in hundreds of thousands of US diesel cars to cheat exhaust emissions tests and make them appear cleaner than they were on the road, and that as many as 11 million vehicles could have similar software installed worldwide.

The US settlement comes as the German car firm continues to face legal action in Ireland and other European countries over its refusal to compensate owners affected on this side of the Atlantic. Over 110,000 vehicles in Ireland across the Volkswagen, Seat, Skoda and Audi brands are involved in the scandal.

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Conspiracy to defraud

On Monday, a VW executive, the second employee charged by US prosecutors, was accused of conspiracy to defraud the United States over the company's emissions cheating and the carmaker was charged with concealing the cheating from regulators.

Volkswagen had previously agreed to spend up to $17.5 billion in the United States to resolve claims by US regulators, owners and dealers and offered to buy back nearly 500,000 polluting vehicles.

Much of the company's senior management departed following the scandal, including chief executive Martin Winterkorn.

VW Group said on Tuesday it had record sales in 2016 of 10.3 million vehicles, including a 12 percent increase in December. That figure should put VW ahead of Japanese rival Toyota Motor Co as the world's largest car producer by volume for the year.

VW is eager to resolve potential criminal charges before the Department of Justice political appointees overseeing the settlement talks depart with the Obama administration.

A criminal settlement in the US would be a milestone in VW’s efforts to draw a line under the affair, in which up to 11 million of the company’s diesel cars worldwide were fitted with software designed to understate harmful emissions of nitrogen oxides in official tests.

In the US, where the scandal was uncovered by regulators, the affair has already cost VW $15.3bn in a partial civil settlement involving 475,000 two-litre diesel cars, an additional $1.2 billion to resolve a class-action lawsuit by the company’s dealers, and a further $1 billion to recall or buy back 60,000 three-litre vehicles.

Any settlement is unlikely, however, to resolve the potential liability of high-level company executives based in Germany or the US, said a Department of Justice official.

Reuters/Financial Times Service