Dieselgate: Continenal fined for 100 million euros

Automotive supplier Continental has agreed to a 100 million euro fine imposed by prosecutors for its involvement in the notorious dieselgate emissions scandal. The fine was due to a “negligent breach of supervisory duties”, meaning the company undertook too little to inspect responsibility and managers for the supply of engine control units and related software that later became known as ‘cheating devices’.

The Hanover State Prosecutor’s Office announced the penalty as part of an ongoing investigation into several automotive companies and suppliers related to emissions cheating. ZF Friedrichshafen already was convicted of 42.5 million euros, while Bosch took 90 million euros over its role in the dieselgate scandal. As the latter was a parts supplier for cheating devices, both convictions are on par but regarded ‘relatively light’.

Confiscating profits

In the case of Continental, headquartered in Hanover, 95 million euros of the fine relate to the money made from selling the units and software to the Volkswagen group. In comparison, the remaining 5 million euros are a penalty. The prosecutor’s office said it aimed to confiscate Continental’s profits from its involvement in the scandal. It has given the company six weeks to pay.

All the suppliers mentioned above have been fined for the same reason (“negligent breach of supervisory duties”), as it’s the only legal basis in Germany on which lawyers could prosecute them within this framework.

Continental confirmed in a statement that the fine will not be appealed. The company stressed that cooperation with the prosecutor and strengthening its compliance structures were critical factors in determining the fine amount. The penalty will not significantly impact its 2024 earnings, as provisions for such liabilities had been made in earlier financial periods.

12 million engine control units

The scandal, widely known as dieselgate, first appeared in 2016 and has since profoundly impacted the global automotive industry. It was revealed that vehicles were equipped with software designed to cheat on emissions tests, resulting in much higher real-world pollution levels than allowed.

Continental’s former powertrain division supplied more than 12 million engine control units that automakers, including Volkswagen Group, used to circumvent emissions regulations.

In January of this year, the administrative court of Schleswig-Holstein, Germany, declared that Volkswagen’s update for diesel engines proposed in the aftermath of dieselgate was also illegal. The legal case against Martin Winterkorn, the reigning CEO of VW Group at the time, is still ongoing.