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VW board set to sign off on $4.3 billion U.S. diesel penalty

Baku, January 11, AZERTAC

Volkswagen AG’s supervisory board is set to sign off on a $4.3 billion settlement of U.S. criminal and civil penalties for rigging diesel-powered cars to cheat on emissions tests, the latest step in the carmaker’s effort to resolve the scandal, according to Bloomberg.

The agreement with the U.S. Department of Justice and customs authorities will include a guilty plea, Wolfsburg, Germany-based VW said Tuesday. The board plans to meet Wednesday to review the agreement.

The accord raises the cost of settlements in the scandal so far to more than $23 billion in the U.S. and Canada, blowing through the 18.2 billion euros ($19.2 billion) the carmaker had set aside to resolve the disputes. At the same time, it would remove one of the last big regulatory obstacles for Volkswagen before the Jan. 20 inauguration of Donald Trump as U.S. president, enabling the carmaker to begin rebuilding its reputation in the country and focus on plans for clean-energy vehicles.

“Although the settlement is higher than reports had indicated, we view the resolution as a positive catalyst for Volkswagen since it removes the final known major liability” from the diesel scandal, even with other legal issues pending, analysts at Goldman Sachs, including Stefan Burgstaller in London, said in a report to clients.

U.S. courts must still approve the settlement. VW also is involved in investor lawsuits in the U.S. and in Germany related to how the emissions-test rigging affected the stock price, as well as consumer lawsuits and a criminal probe in Germany.

At least one employee is facing charges in the U.S. and another has already pleaded guilty related to the scheme. U.S. prosecutors are planning to charge high-level VW executives based in Germany, a person familiar with the matter said.

The draft settlement calls for strengthening compliance systems and installing an independent monitor for three years, Volkswagen said in the statement. The company didn’t say in its statement whether additional individuals would be charged or plead guilty. The Justice Department declined to comment.

U.S. authorities uncovered the carmaker’s efforts to deliberately cheat on emissions tests on diesel vehicles in 2015. The rigged engines had been installed in 11 million vehicles worldwide, and cost former Chief Executive Officer Martin Winterkorn his job.

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