Volkswagen Group pleaded guilty on Friday to three criminal counts arising from its diesel emissions scandal, setting it up for a settlement that will cost it billions more even as it denies top executives were involved.
Judge Sean Cox in a U.S. District Court in Detroit accepted the plea but postponed agreeing to proposed fines and terms of a settlement. Another hearing was set for April 21.
Volkswagen, the German automaker that became an icon with its humble Beetle, pleaded guilty to charges of fraud, obstruction of justice and for misrepresenting the capability of vehicles with diesel engines it imported into the U.S.
Judge Cox said he wanted more time to review the terms of the settlement agreement, which proposes a $4.3 billion fine that is far less than what the company could be fined under federal sentencing guidelines.
"With all due respect ... this is a very, very serious offense," he said, adding that he wanted more time to consider objections filed on behalf of some customers.
The judge, however, accepted Volkswagen's decision to appear in court, plead guilty and waive its right to a jury trial.
Manfred Doess, Volkswagen's general counsel, acknowledged that the company, the world's largest automaker, willfully and knowingly created software designed to fool government regulators so its diesel engines could pass tougher emissions standards adopted in 2007. The software made it so the cars would engage all their emissions gear during testing, then turn it off on the open road. Volkswagen's engines were spewing nitrogen oxides at up to 35 times the legal limit in real-world conditions.
"Volkswagen AG is pleading guilty on all three counts of the allegations because it is guilty of all three counts, and Volkswagen AG has admitted those facts," Doess said.
Doess admitted that Volkswagen employees designed software intended to cheat on emissions and that some employees destroyed documents after they knew the company was under investigation.
Flanked by two attorneys, Doess was careful to say that while high-level employees were involved, they were "below the level of Volkswagen AG management board."
Volkswagen has also agreed to civil settlements worth about $17 billion for U.S. consumers and dealers who own the automaker's diesel vehicles.
As part of a proposal announced in January, the company agreed to sweeping reforms, new audits and oversight by an independent monitor for three years after it admitting to installing cheating devices on its engines. In court, Volkswagen said it was willing to agree to pay a $2.8-billion criminal fine and $1.5 billion to settle environmental, customs and financial violations.
U.S. Attorney John Neal said the amount reflected the seriousness of the crime even though the government could fine Volkswagen $17 billion to $34 billion under federal sentencing guidelines.
"I think in this case we are talking about a very calculated crime, it is a very serious crime and I think the agreement treats the crime very seriously," Neal said.
As part of another court case with the Environmental Protection Agency and other agencies, Volkswagen set aside up to $11 billion for consumers who owned Volkswagen or Audi models that had diesel engines that did not comply with emissions regulations as part of previously announced civil settlements approved by federal authorities.
Owners have the option to sell their vehicle back to the company or terminate their lease without an early termination penalty. Or Volkswagen will fix it to make it comply with emissions laws.
Eligible vehicles with 2-liter, four-cylinder diesel engines include Beetle, Beetle Convertible, Golf, Golf Sportswagen, Jetta, Jetta Sportwagen, Passat and Audi A3. They cover various model years between 2009 and 2014.
For those with the larger 3-liter, six-cylinder engines, models include Touareg. Audi A6, A7, A8, A8L, Q5, Q7 and Porsche Cayenne Diesel. They span the 2009 to 2016 model years.