Germany Fines Volkswagen $1.2 Billion Over Diesel Scandal

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The emissions scandal that engulfed Volkswagen three years ago continues to dog the carmaking giant, as German authorities hit the group with a €1.2bn fine.

The fine follows a U.S. plea agreement from January 2017 when VW agreed to pay $4.3bn to resolve criminal and civil penalties for installing illegal software in diesel engines to cheat strict USA anti-pollution tests.

"It is one of the highest fines ever imposed on a company in Germany", the prosecutor said in a statement.

The prosecutor's office in Braunschweig ordered the fine against the carmaker for organisational deficiencies in supervision that failed to prevent "impermissible software functions" from being installed in 10.7m cars between 2007 and 2015. "Volkswagen assumes that such termination of the proceedings will also have significant positive effects on further active administrative proceedings in Europe against the Volkswagen AG and its subsidiaries".

VW said that it accepted the fine, and would not appeal.

"We work with vigor on dealing with our past", VW Chief Executive Officer Herbert Diess said in a separate statement.

The rigging of as many as 11 million diesel cars worldwide was uncovered by US authorities in September 2015 and triggered the deepest crisis in the manufacturer's history.

"The fact that the criminal risk has now been dealt with is good news", said Arndt Ellinghorst, an analyst with Evercore ISI.

The fine comes two days after prosecutors in Munich widened their emissions cheating probe into Volkswagen's luxury carmaker Audi, to include the brand's chief executive Rupert Stadler among the suspects accused of fraud and false advertising.