Volkswagen’s emissions cheating device scandal

# I. What happened?

On September 18, 2015, the US Environmental Protection Agency (EPA) accused Volkswagen (VW) of using “defeat device” software that made their diesel-powered vehicles appear to have lower emission levels than they actually did. US regulators accused the company of violating the Clean Air Act and ordered VW to recall more than 480,000 VW and Audi vehicles.

In the days that followed, VW’s stock value fell by 23 percent, and on September 23, 2015, Volkswagen’s CEO Martin Winterkorn resigned.

The scandal then spread to other VW brands across the world, including Audi, SEAT, and Skoda, when the governments of Australia, Brazil, Canada, China, Germany, and nine other countries announced plans to investigate the emission levels of vehicles manufactured by the VW Group. An estimated 11 million cars worldwide were implicated in the scandal.

In the US, eight current and former VW executives were indicted by the Department of Justice. One executive was sentenced to seven years in prison in December 2017. In January 2017, VW agreed to pay USD 4.3 billion to settle with the DOJ over the scandal. The company has also agreed to pay a total settlement of USD 25 billion for claims from customers, dealers, and environmental regulators.

In South Korea, the Ministry of Environment fined Audi Volkswagen Korea KRW 17.8 billion (USD 16.6 billion) and launched criminal proceedings against seven VW managers and four employees, including the Managing Director of Audi Volkswagen Korea, who fled to Germany in June 2017, and two of his predecessors. In January 2017, an executive of Volkswagen Korea was sentenced to one year and six months in prison.

In July 2017, EU and German anti-trust regulators began investigating a possible collusion between Volkswagen and other automobile manufacturers to use an inexpensive “dosage” strategy for a liquid solution that neutralizes the exhaust emissions of diesel vehicles.