VW Emissions Scandal: Will the Other (Criminal) Shoe Drop?

VW emissions scandal

by | Jul 5, 2016

VW emissions scandalVolkswagen still may face criminal charges for cheating diesel emission air pollution tests after agreeing to an almost $15 billion settlement last week, according to California attorney general Kamala Harris.

“I cannot confirm or deny an investigation. But even this morning, the Department of Justice has confirmed a criminal investigation is underway,” Harris told ABC News.

Neither Harris not the Department of Justice returned calls seeking comment.

Late last year VW admitted to installing “defeat devices” in almost half a million diesel cars, allowing these cars to circumvent emissions testing for certain air pollutants.

Last week, VW reached a settlement with the US government and state of California and agreed to spend up to $14.7 billion to buy back cars from consumers, mitigate air pollution and promote zero-emission vehicle technology. It’s the largest settlement ever with an automaker, and the largest air pollution settlement in US history.

VW has also settled claims with 44 states, Washington, DC, and Puerto Rico for about $603 million. It faces billions more in fines and penalties in the US and abroad.

The EPA said the settlements do not address any potential criminal liability. And deputy attorney general Sally Q. Yates hinted at future criminal charges, calling the settlements “an important step forward” while adding “let me be clear, it is by no means the last. We will continue to follow the facts wherever they go.”

Yates told the Financial Times that federal prosecutors were “looking at multiple companies and multiple individuals” as part of their criminal probe.

In September 2015 Yates wrote a memo saying that the Department of Justice should hold individuals accountable for corporate wrongdoing. “Such accountability is important for several reasons: it deters future illegal activity, it incentivizes changes in corporate behavior, it ensures the proper parties are held responsible for their actions, and it promotes the public’s confidence in our justice system,” Yates wrote.

When asked if VW executives will be held accountable for the company’s wrongdoing, US attorney Loretta Lynch told Reuters: “What’s important for us in every case, including this case, is to look at those individuals and see what if anything will be resolved with regards to them.”

Does this mean criminal charges ahead for Volkswagen, or its executives?

“If these were individual defendants they would, in my estimation, absolutely face criminal charges — and they should. But the history of the federal government or even the states prosecuting corporations has been a not very aggressive one in the last 20 years,” attorney Carl J. Mayer told Environmental Leader.

Mayer is the founding member of Mayer Law Group, has served as special counsel to the New York state attorney general and as a consultant to the US Senate Special Committee on Investigations. He calls VW’s wrongdoing “a widespread conspiracy” and says although he’s skeptical the automaker will face any criminal charges, “they absolutely should.”

“The number of people who must have been involved in deceiving the environmental testing process must be vast and that would be ripe for criminal charges,” he said.

Mayer points to the bank “robo-signing” scandal in 2010, in which several large banks came under fire for having employees robo-sign thousands of foreclosures using false affidavits. The federal government settled with 13 banks including Bank of America, Wells Fargo and JP Morgan Chase.

“None of the banks faced criminal charges for robo-signing, that they then used to foreclose on people,” Mayer said. “That was a similarly highly egregious crime that should have resulted in multiple criminal charges and unfortunately didn’t result in any.”

At least one recent high-profile case of corporate wrongdoing has resulted in criminal charges against a CEO. Don Blankenship, former CEO of Massey Energy was charged with securities fraud by federal prosecutors for allegedly lying in a press release shortly after an underground explosion at a Massey mine killed 29 miners in West Virginia. The press release said safety was a top priority at Massey.

Massey was ultimately found not guilty of securities fraud; he is currently serving one year in a minimum-security prison for a misdemeanor charge.

Editorials in the New York Times and the Los Angeles Times have called for criminal charges against Volkswagen employees involved in cheating emissions tests. “The managers and employees who did this work engaged in an intentional fraud that not only deceived consumers, but also deceived government agencies responsible for trying to ratchet back the amount of climate-changing pollutants that get added to the atmosphere. Such willful acts demand accountability, not just through civil settlements, but in the criminal courts,” the LA Times wrote.

Maybe it’s just a matter of time before VW faces criminal charges. For now, we’re taking a wait-and-see approach.

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