What criminal sanctions will Volkswagen face going forward? That issue was explored recently in a Wall Street Journal article that discussed the ongoing negotiations between the company and the U.S. Justice Department. The issues raised for VW are above and beyond those that were resolved between VW and the U.S. Environmental Protection Agency, certain states, and U.S. consumers in a civil settlement of approximately $15 billion earlier this year.

This potential criminal resolution brings up several questions, such as what type of resolution? Typically, a company would seek a Deferred Prosecution Agreement so that at the end of the term of the DPA, the charges would be dismissed. Such an agreement would usually be coupled with a fine and penalty and the question would be whether VW would receive any credit for the civil settlement. It would also list out the underlying facts that would be exhibit one in any shareholder, customer, VW-dealer, or other litigation.

The next series of questions would relate to potential criminal liability of individuals, recognizing that VW would basically have to identify and give up its own employees or potentially senior executives to the Justice Department. These individuals would most probably be German citizens and would have to be extradited to the U.S. for trial. Such questions would have to be initially resolved by a German court and there may well be reticence of a German court to send a German engineer or senior executive to the United States for an alleged violation of American law. There is also the question of whether VW will be willing to turn over information on its former senior executives over their role in the years-long development and implementation of the defeat device.

As Compliance Week previously reported, all of this could be an early test of the principles articulated in last year’s Yates Memo. The Yates Memo said that if a company wanted any cooperation credit it had to turn over information on its employees and senior managers. But the Yates Memo also required Justice Department prosecutors to justify any settlement with a corporation that does not include individual prosecutions. It will be interesting to see if the Justice Department follows the prescripts of the Yates Memo. 

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