VW, Justice Dept nearing $3 bln deal to resolve diesel allegations

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By David Shepardson and Joel Schectman | WASHINGTON

WASHINGTON Volkswagen AG and the
U.S. Justice Department are nearing an agreement to resolve the
government’s civil and criminal investigations that would
require the German automaker to pay a penalty of more than $3
billion, sources briefed on the talks said on Friday.

The agreement is not final and could top $4 billion or fall
apart but a deal could be announced as early as next week, said
the sources on condition of anonymity because the talks are
confidential.

Volkswagen is also expected to face oversight by an outside
monitor and agree to other significant reforms in connection
with its diesel cheating scandal as part of a potential deferred
prosecution agreement or guilty plea to criminal charges, the
sources said.

VW has previously agreed to pay up to $17.5 billion to
resolve claims by U.S. owners, federal and state regulators and
dealers and admitted it had misled regulators for years about
illicit software.

A VW spokesman in Germany declined to comment, saying the
automaker was in discussions with authorities.

Volkswagen and the Justice Department have held intensive
talks this week aimed at resolving the case before President
Barack Obama leaves office on Jan. 20. If a deal is not reached
before then it could significantly delay an agreement, the
sources said.

VW admitted in September 2015 to installing secret software
known as “defeat devices” in 475,000 U.S. 2.0-liter diesel cars
to cheat exhaust emissions tests and make them appear cleaner in
testing. In reality, the vehicles emitted up to 40 times the
legally allowable pollution levels.

The company later admitted to also using “defeat devices” in
3.0-liter vehicles. The 80,000 3.0-liter U.S. vehicles had an
undeclared auxiliary emissions system that allowed them to emit
up to nine times allowable limits.

The scandal hurt VW’s global business and reputation, and
led to the ouster of longtime Chief Executive Martin Winterkorn.
VW has been barred from selling any new diesel cars in the
United States since late 2015.

A settlement could help VW largely move past the scandal,
though it still faces lawsuits from U.S. investors and some U.S.
states.

The automaker will spend years fixing or buying back
vehicles and making investments to boost zero emission vehicle
infrastructure and must deposit nearly $3 billion in a trust to
offset excess diesel emissions. It has also agreed to boost the
number of electric vehicles it offers in California.

To date, only one VW employee has been criminally charged in
the United States. He has pleaded guilty and is cooperating with
prosecutors. (Additional reporting by Jan Schwartz in Hamburg)



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