Daimler To Settle US Emission Cheating Probes For $1.5bn

A settlement amount of $1.5bn has been agreed to be paid by German automaker Daimler AG and its subsidiary Mercedes-Benz USA to the United States government and California state regulators towards settling of charges against it to cheating emission tests.

Charges of violating environmental laws through the use of the so-called “defeat device software” to cheat in emissions testing was leveled against Daimler by the US Department of Justice, Environmental Protection Agency and the California attorney general’s office. It was alleged that the company had sold about 250,000 such diesel powered cars and vans in the US which effectively flouted state and federal laws on environment protection and emissions.

US officials said that Daimler will also fix the vehicles with such faulty software under the settlement deal with also includes civil penalties.

Daimler had reached agreement with the Justice Department, Environmental Protection Agency, Customs and Border Protection, the California Air Resources Board and others in the civil and environmental violation charges about the 250,000 diesel cars and vans, the Stuttgart, Germany-based automaker had said on August 13.

Daimler did not disclose all of its software, which included “devices designed to defeat emissions controls”, said Environmental Protection Agency Administrator Andrew Wheeler.

In relation to the charges put against it, Daimler, in a statement denied all the charges of cheating and added that it did not have any liabilities in the US. The company said that the settlement agreement essentially brings an end to civil proceedings without any determination of any guilt on the part of Mercedes and Daimler related to use of emission cheating devices. Further, no notice of violation of the Clean Air Act from the EPA or California regulators, typically common in the case of allegations of use of defeat devices, was received by it, Daimler added.

Further, there is also no obligation on it to buy back the vehicles unlike the case of Volkswagen, the company said, and added that it will also not have an independent monitor for folopwing up on the progress on the settlement.

“By resolving these proceedings, Daimler avoids lengthy court actions with respective legal and financial risks,” the company said.

The emissions control system used for its vehicles in the US was different from what the company uses for its vehicles meant for Europe because of differences in regulatory and legal requirements, Daimler also said.

A one-time charge of about $1.5bn due to the settlement and another one of $875m for the civil settlement will be the impact on the company, Daimler AG said. It however estimated incurring “further expenses of a mid-three-digit-million” euros for the fulfilling of conditions of the settlements.

But the manner in which the vehicles that it had sold, allegedly fitted with defeat devices, would be cleaned up was not made clear by the company. It also did not mention anything about whether it was also accused of any wrongdoing in the US like Volkswagen.

(Adapted from AlJazeera.com)

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