Volkswagen AG Sentenced To Pay Environmental Fines Totalling $196.5 Million

Toronto – January 22, 2020 – Volkswagen Aktiengesellschaft (VW AG), a German-based car manufacturer, was sentenced today to fines totaling $196.5 million after pleading guilty in the Ontario Court of Justice to 58 counts of unlawfully importing into Canada vehicles that do not conform to prescribed vehicle emissions standards, contrary to section 272(1)(a) of the Canadian Environmental Protection Act, 1999, and two counts of providing misleading information, contrary to s. 272(1)(k) of the Act.

In an Agreed Statement of Facts filed with the Court, VW AG admitted that between January 2008 and December 2015, nearly 128,000 diesel engine Volkswagen and Audi vehicles equipped with defeat devices were imported into Canada, along with over 2,000 similarly equipped Porsche vehicles. The company also admitted to deceiving the authorities, both in the U.S. and Canada, and intentionally defying emissions regulations.

In 2006, VW AG employees acting at the direction of certain supervisors, designed, created, and implemented a software function to detect, evade and defeat emissions standards after they realized that the new diesel engine they were designing for use in North America would not meet both the prescribed standards and attract sufficient customer demand in the U.S. and Canadian markets. The devices were then installed on vehicles destined for North America.

Furthermore in 2012, when VW AG believed that some performance issues that plagued the diesel engine vehicles might be caused by the defeat devices, rather than remove the device, they improved on it by adding steering wheel angle detection. This new software function was downloaded on new vehicles being sold in North America, and later expanded to updating software on existing vehicles when brought in for service at a dealership or authorized service center.  

After accepting the joint submission, the Court sentenced VW AG to the fines, consisting of a fine of $188.5 million for the 58 importation offences, based on $1,450 per vehicle for the approximately 130,000 non-compliant vehicles imported, and an $8 million fine for the two counts of providing misleading information, based on a $4 million fine per offence.

The $196.5 million fine is on top of the class action settlement by VW AG that compensated and provided benefits and buyback options to Canadian consumers of the non-compliant vehicles up to a maximum of nearly $2.4 billion.  As well, VW AG paid a civil administrative penalty of $17.5 million under the Competition Act for misleading advertising related to the sale of the vehicles.

In addition, the Court made an order, pursuant to s. 294.1(2) of the Canadian Environmental Protection Act, 1999, recommending that, to the extent possible, the fines credited to the Environmental Damages Fund as a result of these convictions be paid out to support the implementation of projects, proposals or programs nationally or in a province or territory on the basis of excess NOx emissions occurring in each province or territory, taking into account the number of vehicles equipped with a defeat device that were imported into a province or territory.

"This resolution serves the public interest. It reflects the gravity of the conduct, and is consistent with Canadian sentencing principles," said prosecutor Tom Lemon.  "By entering guilty pleas, the company has admitted wrongdoing and accepted full responsibility without the need for a potentially lengthy trial. This is an unprecedented fine in Canada.  It is twenty-six times greater than the highest federal environmental fine ever imposed."

The Public Prosecution Service of Canada is a national organization responsible for prosecuting offences under federal jurisdiction in a manner that is free of any improper influence and that respects the public interest. The PPSC is also responsible for providing prosecution-related advice to law enforcement agencies across Canada.

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