German prosecutor hits Volkswagen with €1B Dieselgate fine

Volkswagen cars wait to be shipped at the harbour in Bremerhaven | Patrik Stollarz  AFP via Getty Images

German carmaker Volkswagen said Wednesday it has been fined €1 billion by prosecutors in the German city of Braunschweig in connection with the Dieselgate scandal.

VW said that it accepted the fine, and would not appeal.

Prosecutors concluded that Volkswagen failed to properly oversee the activity of its engine development department, resulting in some 10.7 million diesel vehicles with illegal emissions-controlling software being sold worldwide.

The company's statement also noted that paying the fine would end "active regulatory offense proceedings" by the public prosecutor.

The fine comes two days after prosecutors in Munich widened their emissions cheating probe into Volkswagen's luxury carmaker Audi, to include the brand's chief executive Rupert Stadler among the suspects accused of fraud and false advertising.

VW is far from being out of the woods.


"We must plan for interruptions to production in the third quarter", VW chief executive Herbert Diess told workers.

"Courts will now hardly be able to dismiss consumer complaints", said Jan-Eike Andresen of platform MyRight which has mandated USA law firm Hausfeld to pursue civil claims.

Just a year after being smacked with a $4 billion fine by the U.S. government, VW is getting handed a 1 billion euro fine by the German government for its diesel emissions cheating.

VW said it held a board meeting to discuss the crisis, with members of the supervisory board also being informed.

Finance chief Frank Witter will update investors on August 1 on the implications of the fine for the carmaker's cash position, alongside its second-quarter results, VW said.

Analysts at Evercore ISI said the fine would likely help end all criminal investigations against VW in Europe, but would not settle shareholder lawsuits.

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