VW forges U.S. deal arising from diesel emissions scandal
By Alexandria Sage and David Shepardson
SAN FRANCISCO/WASHINGTON (Reuters) - Volkswagen AG, driving to move beyond a scandal that has disrupted its global business and sullied its reputation, announced a sweeping U.S. deal on Thursday to buy back or potentially fix about a half million polluting diesel cars and set up environmental and consumer compensation funds.
The settlement, which sources and analysts said could cost VW (VOWG_p.DE: Quote) at least $10 billion, is not likely to end the Dieselgate controversy that began last September when the world's No. 2 automaker admitted using sophisticated secret software in its cars to cheat exhaust emissions tests.
Despite the potentially big price tag, Volkswagen shares rose 6 percent on Thursday after rising nearly 7 percent on Wednesday on news of the agreement, which must be finalized by June 21.
VW shares are still down nearly 20 percent since the emissions cheating was exposed as investors worried not only about large fines and management instability, but the toll the scandal would take on the German automaker's efforts to stay competitive.
VW still faces U.S. Justice Department fines as part of an expected civil settlement, an ongoing Justice Department investigation that could lead to criminal charges and an outcry in Europe to do more for millions of owners of vehicles there that also have illegal software to defeat emissions testing. [nL8N1541VG]
The framework of the deal was hammered out by VW with the Justice Department, state of California, the U.S. Environmental Protection Agency and Federal Trade Commission as well as lawyers for car owners who filed class action civil lawsuits.
It was brokered by former FBI director Robert Mueller, the court-appointed mediator, in marathon talks at a Washington law firm over the past week. It is expected to settle more than 600 class suits in U.S. courts.
U.S. District Judge Charles Breyer, who outlined the agreement during a hearing in San Francisco, said he expects the issues of Justice Department fines and resolving the 3.0 liter engines will be addressed "expeditiously." Continued...