German prosecutors have given Volkswagen six weeks to pay a €1 billion penalty to close the diesel manipulation investigation against the car giant.
The fine is the largest ever imposed in Germany history and prosecutors said the fine would be “painful” but not break the company that earned almost 14 billion in operating profits last year.
The deal announced on Wednesday evening closes the case against VW, which has admitted installing defeat device software in 11 million vehicles worldwide to manipulate emissions. In return it pays the fine and admits responsibility for defrauding its customers and polluting the environment beyond EU emissions limits.
After a multi-billion fine imposed by US authorities, which uncovered the crooked behaviour three years ago, the German fine is technically the result of a “misdemeanour” because German law allows no criminal prosecutions against companies, only individuals.
“But one thousand million euro for a misdemeanour is a clear statement,” said Mr Klaus Ziehe, senior state prosecutor in Braunschweig, near VW’s Wolfsburg headquarters.
The fine is a windfall for the state of Lower Saxony, home to VW and one of the company’s largest shareholders. State premier Stephan Weil, who sits on the VW supervisory board, said his government would soon decide what to do with the money.
Prosecutor Klaus Ziehe insisted the its level of the fine was not the result of arbitrary “oriental bazaar” haggling but was the result of close analysis of VW’s ill-gotten gains.
“It was primarily about the question of what VW would have had to invest to produce a proper car, thus the investment saved ,” he said. With an eye on looming civil suits, the prosecutors had to strike a balance and “not let the company go broke and allow (civil) claims hit the wall”.
Volkswagen faces up to €10 billion in civil suits brought by shareholders who accuse the company of failing to inform them in a timely manner of looming problems in the company.
But German auto industry expert Frank Schwope, of the NordLB bank the German fine was “not that high a sum” given VW was fined €3.7 billion in the US for manipulation of an estimated 350,000 vehicles. The company has paid a further €6.4 billion to buy back the vehicles now stored in 37 facilities across the US.
For Volkswagen chief executive Herbert Diess said the fine was proof the German car giant was “working intensively” to deal with its past.
“Further steps are necessary to restore trust in our company and the auto industry piece by piece,” he said.
