Kenneth Feinberg, hired by Volkswagen to set up and administer a compensation fund in the Dieselgate scandal, told a German newspaper today that owners will be given generous compensation.
Owners of diesel vehicles involved in the U.S. Dieselgate scandal will likely be offered generous compensation for their vehicles, the head of Volkswagen’s claims program told a German newspaper today. Kenneth Feinberg, head of the VW claims program, told the Frankfurter Allgemeine Sonntagszeitung, that Volkswagen is still working out the details of the offer. It could be cash, car buybacks, repairs or replacements.
Feinberg, who has headed payment programs in the General Motors ignition switch scandal, the BE Deepwater Horizon oil spill, the Boston Marathon One Fund and 9/11 victims, was tasked by the automaker with creating and administering its compensation program in December.
Beset with problems in moving ahead on its issues, Volkswagen is struggling to put an exact price on the diesel emissions scandal. Friday, for example, VW postponed publication of its 2015 financial results and it has delayed its shareholder meeting, Reuters said today. Volkswagen is also working with U.S. regulators to find an acceptable fix for its TDI diesel engines. Last week, Audi filed a plan for its 3.0-liter V-6, used in some Audi, Porsche and VW crossovers, SUVs and cars, with the California Air Resources Board (CARB). Both CARB and the Environmental Protection Agency (EPA) rejected an earlier attempted fix plan for the automaker’s 2.0-liter four-cylinder powerplants.
Because of the twists and turns that are occurring, Feinberg’s original timetable for the fund – 60 to 90 days – is facing delays. “My hands are tied, as long as VW and the authorities have not overcome their differences, “he said. Interestingly, when the fund finally does gain approval, it looks as if Volkswagen will have smooth, albeit expensive, sailing. An overwhelming majority of the of the people who are seeking settlements will likely accept their offers.
“Look at my prior cases: 97 percent of the victims of September 11 accepted my offer. At GM and BP, it was more than 90 percent, too. That has to be my target for VW, the claims administration expert said, adding that he has full authority to decide on compensation.
Feinberg characterized his dealings with owners as strictly business. In general, the attorney noted that by treating transactions as business, they become “less emotional.” Time after time in his email dealings with owners, Feinberg noted, that owners made it clear they want “to be treated fairly. They are all quite reasonable.” Asked about any health-related claims, Feinberg said no decision has been made, but, “I am inclined not to accept [health claims] and [will] tell such people [to] sue Volkswagen if they want to.”
Inevitably, Dieselgate has had been a drag on VW’s performance. Because the scandal has increased investor uncertainty, the automaker’s shares have tanked 26 percent since Jan. 1. And, performance before Jan. 1 was down at least 15 percent.
Though its value has fallen, VW will survive thanks to staunch supporters like Norway’s $850 billion Sovereign Wealth Fund, the world’s largest. The fund intends to hold onto its investment in the carmaker. “VW is an important company for Germany, Europe and the world. That’s why we will keep our stake as long as the fund the company exist,” said Yngve Slyngstad, the fund’s chief executive.
One thing that has increased concern among observers is the rejection by U.S. regulators of Volkswagen’s plan to fix 2.0-liter four-cylinder diesel-engined cars. The concern is that the carmaker may have to do a large number of cash buybacks in the world’s second-largest auto market, Europe, and that this will put further strain on the automaker.
Another concern in Europe is the pressure Volkswagen is facing pressure from the European Commission and lawmakers to give European owners a cash-assist similar to the $1,000 the automaker has given to U.S. buyers as a gesture of good faith. The concern is that this would add thousands of VW diesel owners to this pool, further increasing the amount that is being spent to clean up Dieselgate.
Volkswagen has already set aside 6.7 euros ($7.5 billion) in the third quarter of 2015 to cover repair costs for vehicles worldwide. Some believe now that the figure may have to be revised upward by another 2 or 3 billion euros.