Business Crimes Hotline

Volkswagen

Volkswagen's conspiracy to cheat the U.S. emissions test system began approximately 10 years ago when employees at Volkswagen realized that their engineers could not produce a diesel engine that would pass the 2007 emissions standards and also be attractive to consumers. It was at this point that several employees decided to invent technology that would enable the vehicles to “fool” the emissions tests by making it appear that the vehicle was producing less nitrogen oxide than it actually produced during ordinary driving.

Engineers at Volkswagen created technology that was capable of identifying when the vehicle was undergoing emissions testing based on the way it was being driven. This would then trigger a special mode of vehicle operation that would pass the emissions test. However, if the technology identified that the car was being driven for ordinary purposes on the road, the technology would trigger a different operational mode, which caused pollution emissions over 40 times the legal limit. This software was ultimately used in cars from model year 2009 through model year 2016 that were sold in the U.S. Throughout this time period, Volkswagen was marketing its vehicles as “clean diesel.”

In addition to the original technology, Volkswagen issued software updates over the intervening period to improve the vehicle's capability in recognizing when it was undergoing emissions testing. Despite the real purpose of the technology updates, Volkswagen told regulators and consumers that this technology was meant to improve vehicle operations and emissions in general.

In addition to the fines levied against the company, six individuals from Volkswagen were also indicted in the Eastern District of Michigan for their participation in the plan to deceive the emissions tests. Some of these individuals were involved in the conspiracy from the beginning, while others were employees who later learned of the test-deceiving technology and supported its continuation. These individuals were also responsible for hiding evidence of their crimes from regulators, who began to investigate Volkswagen after a 2014 study demonstrated that Volkswagen vehicles had drastically different emissions levels in road tests than during official emissions testing.

Beyond the criminal penalty, Volkswagen also must pay hefty civil penalties. The company will pay $1.45 billion to settle claims by the Environmental Protection Agency (EPA) and U.S. Customs and Border Protection, in addition to $50 million for violating the Financial Institutions Reform, Recovery, and Enforcement Act. This brings Volkswagen's total penalty payments to over $4 billion.

Rolls-Royce

Rolls-Royce entered into a Deferred Prosecution Agreement (DPA) with the U.S. Government in which it agreed to pay about $170 million dollars in criminal penalties for violations of the Foreign Corrupt Practices Act (FCPA). The DPA states that Rolls-Royce bribed foreign government officials in order to win the company contracts providing power systems for projects around the world. Rolls-Royce admitted to paying bribes in 13 countries, including China, Russia, and Brazil, from 2000 to 2013.

Rolls-Royce admitted to paying over $35 million in bribes to foreign government officials to learn inside information regarding bidding processes, and influence government officials to award contracts for state projects. Instead of paying bribes directly, Rolls-Royce relied on intermediaries to pay government officials to hide the nature of the payments. These intermediaries would often receive commissions from contracts that Rolls-Royce acquired with the country in question, masking the transmission of funds from Rolls-Royce to government officials. The intermediaries could therefore claim to be charging fees for legitimate business services, but would then use some of the money Rolls-Royce paid them for “services” to bribe the local government officials who were responsible for granting contracts.

Parallel investigations also occurred through the Serious Fraud Office (SFO) in the UK and the Ministério Público Federal (MPF) in Brazil. The U.S. government granted Rolls-Royce a $25 million credit on its criminal penalty payment to the U.S. based on penalties paid to the MPF for the same conduct. The SFO, which first announced that it was investigating Rolls-Royce in 2012, reported that this investigation was the largest the agency had ever undertaken, with a cost of over $16 million. In total, Rolls- Royce paid over $800 million in penalties to the three countries.

The Assistant Director of the Federal Bureau of Investigation's (FBI) Criminal Investigative Division, Stephen Richardson, stated that “[t]his resolution will stand as a warning to big and small companies all across the world that the FBI will not tolerate the foreign corruption that threatens our fair and competitive markets.”

WASHINGTON, DC

DOJ Collects Billions From Volkswagen and Rolls Royce Enforcement Actions

During the first month of 2017, the Department of Justice (DOJ) collected billions in fines as two major companies admitted to criminal behavior. On Jan. 11, unsealed documents showed that Volkswagen AG (Volkswagen) agreed to pay $2.8 billion in criminal penalties for cheating on EPA and California Air Resources Board (CARB) emissions tests. Less than one week later, on Jan. 17, Rolls-Royce plc (Rolls-Royce) agreed to pay the DOJ $170 million as a penalty for bribing foreign officials to win lucrative contracts. That penalty is in addition to fines Rolls-Royce must pay to the UK and to Brazil, totaling roughly $600 million and $25.5 million, respectively.

Volkswagen

Volkswagen's conspiracy to cheat the U.S. emissions test system began approximately 10 years ago when employees at Volkswagen realized that their engineers could not produce a diesel engine that would pass the 2007 emissions standards and also be attractive to consumers. It was at this point that several employees decided to invent technology that would enable the vehicles to “fool” the emissions tests by making it appear that the vehicle was producing less nitrogen oxide than it actually produced during ordinary driving.

Engineers at Volkswagen created technology that was capable of identifying when the vehicle was undergoing emissions testing based on the way it was being driven. This would then trigger a special mode of vehicle operation that would pass the emissions test. However, if the technology identified that the car was being driven for ordinary purposes on the road, the technology would trigger a different operational mode, which caused pollution emissions over 40 times the legal limit. This software was ultimately used in cars from model year 2009 through model year 2016 that were sold in the U.S. Throughout this time period, Volkswagen was marketing its vehicles as “clean diesel.”

In addition to the original technology, Volkswagen issued software updates over the intervening period to improve the vehicle's capability in recognizing when it was undergoing emissions testing. Despite the real purpose of the technology updates, Volkswagen told regulators and consumers that this technology was meant to improve vehicle operations and emissions in general.

In addition to the fines levied against the company, six individuals from Volkswagen were also indicted in the Eastern District of Michigan for their participation in the plan to deceive the emissions tests. Some of these individuals were involved in the conspiracy from the beginning, while others were employees who later learned of the test-deceiving technology and supported its continuation. These individuals were also responsible for hiding evidence of their crimes from regulators, who began to investigate Volkswagen after a 2014 study demonstrated that Volkswagen vehicles had drastically different emissions levels in road tests than during official emissions testing.

Beyond the criminal penalty, Volkswagen also must pay hefty civil penalties. The company will pay $1.45 billion to settle claims by the Environmental Protection Agency (EPA) and U.S. Customs and Border Protection, in addition to $50 million for violating the Financial Institutions Reform, Recovery, and Enforcement Act. This brings Volkswagen's total penalty payments to over $4 billion.

Rolls-Royce

Rolls-Royce entered into a Deferred Prosecution Agreement (DPA) with the U.S. Government in which it agreed to pay about $170 million dollars in criminal penalties for violations of the Foreign Corrupt Practices Act (FCPA). The DPA states that Rolls-Royce bribed foreign government officials in order to win the company contracts providing power systems for projects around the world. Rolls-Royce admitted to paying bribes in 13 countries, including China, Russia, and Brazil, from 2000 to 2013.

Rolls-Royce admitted to paying over $35 million in bribes to foreign government officials to learn inside information regarding bidding processes, and influence government officials to award contracts for state projects. Instead of paying bribes directly, Rolls-Royce relied on intermediaries to pay government officials to hide the nature of the payments. These intermediaries would often receive commissions from contracts that Rolls-Royce acquired with the country in question, masking the transmission of funds from Rolls-Royce to government officials. The intermediaries could therefore claim to be charging fees for legitimate business services, but would then use some of the money Rolls-Royce paid them for “services” to bribe the local government officials who were responsible for granting contracts.

Parallel investigations also occurred through the Serious Fraud Office (SFO) in the UK and the Ministério Público Federal (MPF) in Brazil. The U.S. government granted Rolls-Royce a $25 million credit on its criminal penalty payment to the U.S. based on penalties paid to the MPF for the same conduct. The SFO, which first announced that it was investigating Rolls-Royce in 2012, reported that this investigation was the largest the agency had ever undertaken, with a cost of over $16 million. In total, Rolls- Royce paid over $800 million in penalties to the three countries.

The Assistant Director of the Federal Bureau of Investigation's (FBI) Criminal Investigative Division, Stephen Richardson, stated that “[t]his resolution will stand as a warning to big and small companies all across the world that the FBI will not tolerate the foreign corruption that threatens our fair and competitive markets.”