U.S. Indicts Six Volkswagen Executives in Emissions Scandal
German auto maker admits to criminal wrongdoing, to pay $4.3 billion penalty
Six Volkswagen AG executives were indicted by a grand jury on Wednesday as the German auto maker formally admitted to criminal wrongdoing in its diesel-emissions cheating case.
The company agreed to pay a $2.8 billion criminal fine and an additional $1.5 billion in civil penalties to resolve the last significant U.S. government action expected against the company over its cheating, which became public in September 2015.
Volkswagen has acknowledged that it rigged nearly 11 million diesel vehicles world-wide to cheat on emissions tests, including some 600,000 in the U.S. The vehicles produced toxic tailpipe emissions up to 40 times more than allowable limits during normal road use.
In the plea agreement, which was filed in federal court in Detroit and needs to be approved by a judge, the company agreed to “cooperate fully” in ongoing investigations into Volkswagen employees and executives.
“Volkswagen deeply regrets the behavior that gave rise to the diesel crisis,” Volkswagen Chief Executive Matthias Mueller said.
Volkswagen’s management and supervisory boards met Wednesday to approve the settlement.
“The trust of our customers, our shareholders, partners, employees and the general public is our most important asset. The Supervisory Board will spare no effort to ensure that Volkswagen fully restores their confidence,” said Hans Dieter Poetsch, Volkswagen chairman.
The Justice Department also said six Volkswagen executives had been indicted Wednesday by a federal grand jury for participating in the conspiracy.
Oliver Schmidt, who was once in charge of ensuring that Volkswagen vehicles complied with U.S. emissions, was arrested in Miami on Saturday and remanded to prison on Monday. The Justice Department said the other indicted executives not yet arrested are Heinz-Jakob Neusser, Jens Hadler, Richard Dorenkamp, Bernd Gottweis and Jürgen Peter. They are believed to be in Germany.
Jens Hadler, a former executive who was head of engine development before becoming chief of powertrain development in 2007, was surprised by the news that he had been charged, when informed by a reporter. Mr. Hadler declined to comment. Other executives couldn’t be reached for comment.
All were charged with one count of conspiring to defraud the U.S., defraud Volkswagen’s U.S. customers and violate the Clean Air Act by lying to regulators and the public about the ability of VW’s “clean diesel” technology to comply with U.S. emissions requirements.
Volkswagen admitted in the plea agreement that its supervisors and employees agreed to deceive regulators and customers between 2006 and 2015 about its cheating software, and that some of them tried to delete relevant documents after regulators were asking questions about the issue.
According to the plea agreement, several supervisors in the Volkswagen-brand engine development department realized the company couldn’t design a diesel engine to meet regulatory standards and attract U.S. demand, so they directed employees to create a software function to detect, evade and defeat U.S. emissions standards as early as 2006.
Some of the supervisors encouraged employees to hide their efforts, and in 2014 and 2015, misled regulators about the reasons for the discrepancy in road emissions and controlled tests, according to the agreement.
The obstruction of justice charge stems from efforts by a Volkswagen supervisor to delete a folder on a computer in August 2015, after a meeting to prepare for a presentation to a regulator.
Prosecutors said the penalty against the company was calculated based on an assessment that Volkswagen’s misconduct caused $8.5 billion in losses. Prosecutors said Volkswagen earned credit for its previous civil agreements to compensate customers and remediate the pollution, and for cooperating in the investigation, including its work in gathering “substantial amounts” of evidence and interviewing hundreds of witnesses.
“To be clear, Volkswagen knew of these problems, and when regulators expressed concerns, [executives] obfuscated…and they ultimately lied,” said U.S. Attorney General Loretta Lynch. Volkswagen will be placed on three years probation, she said, and must hire an independent monitor to audit the auto maker’s compliance practices.
Volkswagen’s sale of vehicles containing illegal defeat-device software allowing them to evade emissions tests “is a violation that cannot go unnoticed or unanswered,” said Environmental Protection Agency Administrator Gina McCarthy.
The charges resulted from a 16-month criminal investigation, said Federal Bureau of Investigation Deputy Director Andrew McCabe. “It’s now clear that Volkswagen’s top executives knew about this illegal activity,” Mr. McCabe said, adding they then purposefully kept stakeholders “in the dark.”
The Justice Department’s approach to the Volkswagen case comes after criticism prosecutors weren’t tough enough in previous corporate probes.
Deputy U.S. Attorney General Sally Yates in 2015 urged prosecutors to pursue individuals in corporate investigations amid criticism the Justice Department penalized companies without pursuing employees involved in alleged misconduct. A guilty plea from Volkswagen to criminal charges represented a further toughening still, after other auto makers avoided such corporate stains to resolve criminal cases stemming from safety transgressions.
“The fact that we are announcing charges today against six high ranking executives at Volkswagen…demonstrates that this is not just a paper policy,” Ms. Yates said. “Faceless multinational corporations don’t commit crimes, flesh and blood people commit crimes.”
Five of the six executives currently reside in Germany. Ms. Lynch said “it’s too early” to know whether those Volkswagen executives would travel to the U.S. to face charges.
Ms. Lynch said the Justice Department probe of Volkswagen employees is ongoing, suggesting others could be ensnared by prosecutors. “We will continue to look at individuals,” she said.
VW admits guilt and pays $4.3bn emissions scandal penalty
Six executives based in Germany indicted following cheating probe
Volkswagen will plead guilty to three felonies and pay $4.3bn in penalties to settle a US Department of Justice investigation into the diesel emissions scandal that has engulfed the German carmaker for the past 15 months.
Six VW executives based in Germany have also been indicted in connection with the case, including Oliver Schmidt who was arrested in the US on Monday, said Loretta Lynch, US attorney-general.
“For years, Volkswagen advertised its vehicles calling them ‘clean diesel’. Our investigation has revealed they were anything but,” Ms Lynch said.
The settlement announced on Wednesday comes more than a decade after VW first opted to design special software to outwit Environmental Protection Agency tests rather than sacrifice power in a new diesel engine.
Up to 11m vehicles worldwide were fitted with the “defeat devices” to reduce their nitrogen oxide emissions in laboratory tests. When government regulators grew suspicious, its executives then lied and destroyed documents.
“Volkswagen’s top executives knew about this illegal activity and deliberately kept regulators, shareholders and consumers in the dark — and they did this for years,” said Andrew McCabe, deputy director of the Federal Bureau of Investigation.
The penalty, which includes a criminal fine of $2.8bn, is the second-largest criminal environmental settlement in US history behind BP’s Deepwater Horizon case. It represents an attempt by one of the world’s largest carmakers to resolve a scandal that ranks as the worst crisis in the company’s history.
VW pleaded guilty to charges of conspiracy to violate the Clean Air Act and commit wire fraud, obstruction of justice and making false statements in order to import goods. The six indictments represented a validation of a DoJ strategy to target individual executives in corporate crime prosecutions.
Launched by deputy attorney-general Sally Yates in September 2015, the policy has been criticised as ineffectual.
But prosecutors said that those indicted on Wednesday held positions of authority, with one of the men managing about 10,000 employees. “The fact that we are announcing charges today against six high-ranking executives at Volkswagen — not just six employees but six high-ranking executives at Volkswagen — demonstrates this is not a paper policy,” Ms Yates said.
Along with Mr Schmidt, a federal grand jury has indicted for their roles in the scheme Heinz-Jacob Neusser, 56, a member of the management board for VW Brand; Jens Hadler, 50, former head of engine development; Richard Dorenkamp, 68, another former engine development executive; Bernd Gottweis, 69, a former quality management supervisor; and Jurgen Peter, 59, an executive in VW’s quality management and product safety group.
Other than Mr Schmidt, all of the men are in Germany, which generally does not extradite its citizens.
The company will pay $1.5bn to settle civil claims by the EPA and US Customs as well as $50m for violations of the Financial Institutions Reform, Recovery and Enforcement Act related to the pooling of car leases into asset-backed securities.
David Uhlmann, former head of the DoJ’s environmental crimes unit, noted that the government did not agree to a deferred prosecution agreement, a more lenient way of dealing with corporate lawbreaking.
“It was essential that the justice department insist on a guilty plea given the egregiousness of Volkswagen’s misconduct and the fact it reached very high in the company,” he said.
VW shares rose 3.3 per cent on Wednesday, after the company announced late on Tuesday that it was in “advanced discussions” to settle for $4.3bn.
Wednesday’s penalties come on top of the $15.3bn that VW agreed in June to pay in a partial civil settlement with federal and state governments and owners of cars fitted with two-litre engines, plus an additional $1bn announced last month related to three-litre engine models. VW said in October that it had set aside €18.2bn ($19.2bn) to cover the costs of the scandal.
VW must also accept and pay for an independent monitor of its compliance programmes for three years. The company has agreed to independent audits, establishment of an internal committee and additional vehicle testing.
The plea agreement filed in federal court in Detroit shows that the decision to cheat the emissions tests was contentious within VW.
Six supervisors, often over their subordinates’ objections, and one company attorney directed specific acts to design the defeat device or conceal its existence from regulators, according to the plea agreement.
VW employees destroyed documents as part of a broad cover-up of the engines used in 590,000 cars sold in the US.
On August 31 2015, as the cover-up was unravelling, a VW supervisor deleted files containing the term “acoustic function”, a reference to the cheating software, and instructed subordinates to do likewise.
A second supervisor instructed his assistant to throw away a computer hard drive containing potentially incriminating files, according to court documents. Inside VW and Audi, “thousands of documents were deleted by approximately 40” employees.
After the EPA publicly disclosed VW’s emissions cheating in September 2015, the company’s internal investigation recovered many of the deleted files and turned them over to prosecutors.
That co-operation earned the company a 20 per cent reduction in the minimum financial penalty it might have faced, the DoJ said. VW also received $11bn in credit for its settlements with customers and payments into an environmental remediation trust.
Shire agrees $350m settlement in US ‘kickback’ case
UK-listed group accused of ‘lavish inducements’ for doctors to use skin treatment
Shire, the London-listed pharmaceuticals group, has agreed a $350m settlement over US claims that it used “kickbacks and other unlawful methods” to induce doctors to prescribe one of its drugs.
The US Department of Justice said Shire staff had unlawfully “induced clinics and physicians with lavish dinners, drinks, entertainment and travel” as well as “unwarranted payments” for speaking engagements and cash credits and rebates to boost sales of Dermagraft, a bioengineered human skin substitute.
Shares in the company fell more than 3 per cent after a DoJ announcement that came as president-elect Donald Trump attacked pharmaceutical companies for “getting away with murder” over drug pricing. Mr Trump’s comments caused pharma stocks to tumble — the Nasdaq biotechnology index was down as much as 3.7 per cent while larger drugmakers such as Pfizer fell 2.2 per cent.
Deputy US attorney-general Benjamin Mizer, head of the justice department’s civil division, said the settlement was “the largest False Claims Act recovery” in a kickback case involving a medical product.
“Kickbacks by suppliers of healthcare goods and services cast a pall over the integrity of our healthcare system. Patients deserve the unfettered, independent judgment of their healthcare professionals,” Mr Mizer said.
The DoJ said Shire had also “made false statements to inflate the price of Dermagraft”. The allegations were brought in six lawsuits filed by a whistleblower in a process that allows private parties to sue on behalf of the government.
Shire announced in August last year that it would settle the Dermagraft case for the specified amount during publication of its second-quarter results and made a provision for the charge.
It said it had not “admitted wrongdoing of any kind” in the finalised settlement.
The US prohibits payments to induce the use of medical services covered by Medicare, Medicaid and other federal healthcare programmes. The Anti-Bribery statute and the Federal Acquisition Regulations also prohibit bribes to government officials or employees.
In a statement the DoJ alleged that, as a result of these violations, Shire submitted “hundreds of millions of dollars of false claims for Dermagraft”.
Shire suffered a loss in the third quarter as the group missed revenue expectations and absorbed the costs of its $32bn takeover of Baxalta.
January 11, 2017
MAKOR - Special Situation: E.ON (EOAN: GR) post Uniper (UN01: GR) spin-off - BUY
E. ON (EOAN: GR) post Uniper (UN01: GR) spin-off – what can drive the upside?
Ø 2016 has been a transformational year for E.ON. On January it spun-off its fossil fuel business into a new company – Uniper, and then on September IPO’ed it on Frankfurt stock exchange.
Ø Following the spin-off, E.ON is now focused on clean energy - renewables, energy network and energy efficiency services.
Ø ~70% of E.ON remaining assets following the spin-off are RAB/long contracted assets, with high visibility on earnings and stable cash flows. This makes E.ON’s business model attractive with a defensive growth profile.
Ø We believe that the threats of the Nuclear waste-and-storage liabilities, and the capital increase that was anticipated in the market, have been to a large extant removed.
Ø Shares are inexpensive relative to the sector and also offer a free option on the Tax fuel case.
Ø Dividends and balance sheet structure remain the key question as current yield is below sector average.
Ø At current price we believe risk is skewed to the upside, and our SOTP analysis (page 3) values the shares at ~18% above their market price. We recommend to set Long E.ON and hedge the position with an ETF on European utilities (SX6P).
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ECB's Draghi: Central Bank has to carefully analyze Deutsche Boerse-LSE merger proposal - press
Dans un communiqué de presse, la direction de iTélé officialise l'arrivée de Jean-Pierre Elkabbach sur son antenne prochainement, mais également à la direction du groupe Vivendi-Canal Plus.
Voici le communiqué de la chaîne:
"Jean-Pierre Elkabbach rejoint i TELE pour le lancement prochain de CNEWS.
Il assurera des interviews politiques et de grands entretiens. Il est également nommé conseiller auprès de la Direction Générale du Groupe Vivendi/CANAL pour son développement."
Quelques minutes plus tard, dans un communiqué, le groupe Lagardère a fait savoir que "Arnaud Lagardère a décidé en accord avec Vincent Bolloré, Président du conseil de surveillance de Vivendi, de reconduire Jean-Pierre Elkabbach dans sa mission de conseiller pour les médias du groupe Lagardère."
Arnaud Lagardère explique que : « l'expérience professionnelle de Jean-Pierre Elkabbach et sa passion de l'information sont pour moi deux atouts supplémentaires pour les activités Média du Groupe. »
Tesla has a new vice president heading up Autopilot efforts — Chris Lattner, whose departure from Apple was reported only earlier today. Lattner worked at Apple for 11 years, where his chief contribution was creating Swift, Apple’s most recent programming language, which is relatively easy for beginners to pick up and begin using to create apps for macOS, iOS and beyond.
The role at Tesla had been filled by SpaceX VP of Software Jinnah Hossein, who was doing double-duty at both companies (much like Elon Musk himself does in the CEO spot). Tesla says they’re “excited” about Lattner’s ability to help them “accelerate the future of autonomous driving,” in a blog post announcing the move.
Lattner’s history includes creating the Clang compiler and designing the LLVM compiler optimization infrastructure. He was also a key contributor to the evolution of Objective C and worked on Apple’s Xcode software development tool during his time at the iPhone maker. He also apparently builds beautiful raw-edge wood furniture:
Tesla’s poach of Lattner is a significant win for Tesla, given the breadth of his influence on software development and his expertise. Tesla announced late in 2016 that all of its vehicles going forward would have all the hardware on board necessary for full self-driving capabilities, and Elon Musk said that he’s aiming to have a fully autonomous coast-to-coast test drive of a Tesla car ready for the end of this year. Lattner could be a big help in achieving those ambitious goals in Musk’s typically aggressive timelines.
>>> Vivendi - JP Elkabbach to join iTele and will be part of Executive committee of Groupe vivendi