Stellantis to pay nearly $204 million to settle emissions fraud case

Breana Noble Robert Snell
The Detroit News

Stellantis NV will pay almost $204 million to resolve a multi-year emissions fraud investigation into Fiat Chrysler Automobile NV diesel vehicles, according to a criminal information filing, which suggests the defendant has reached a deal to plead guilty.

The Justice Department filing made on Thursday in the U.S. District Court for the Eastern District of Michigan represents the second criminal case in recent months against FCA US LLC, the U.S. subsidiary of the FCA group. FCA merged with French automaker Groupe PSA last year to create Stellantis.

A company representative is expected to appear at a plea hearing on the automaker’s behalf at 1:30 p.m. Friday in federal court in Detroit, according to the court docket. A Stellantis spokesperson declined to comment.

FCA was charged with conspiracy to defraud the United States in violation of the Clean Air Act and to commit wire fraud. Last week, Reuters reported the pending plea deal and said the automaker would pay approximately $300 million in penalties.

In 2020, The Detroit News reported the company disclosed in financial filings that it was expecting to pay almost $259 million to settle the criminal allegations.

The charge filed against FCA on Thursday is related to a pending 2019 case against diesel senior manager Emanuele Palma and two Italian nationals who work for FCA Italy SpA, the Italian subsidiary of Stellantis. The officials have been accused of conspiring to cheat federal emissions tests and deceiving consumers about the fuel efficiency of more than 100,000 diesel Jeep and Ram vehicles spanning model years 2014 to 2016.

The automaker, federal regulators have alleged, didn't disclose at least eight auxiliary emission control devices on its Jeeps and pickups. Automakers can legally deactivate a vehicle’s emission control system under certain conditions, but regulators require they disclose them when applying for certificates that are needed to sell cars in the U.S.

FCA previously resolved civil allegations related to emissions testing, but those didn't require it to admit guilt.

The filing is the second criminal case against FCA in the past two years. In January 2021, FCA agreed to pay a $30 million fine to settle a criminal investigation into auto executives breaking federal labor laws.

That deal involved the automaker pleading guilty to one count of conspiracy to violate the Labor Management Relations Act, ending prolonged negotiations stemming from a years-long corruption scandal involving the United Auto Workers. The investigation led to more than a dozen convictions, including three FCA employees, and revealed union leaders and auto executives broke federal labor laws, stole union funds and received bribes and illegal benefits from union contractors and FCA executives.

The emissions-related charges come five years after Volkswagen AG pleaded guilty to criminal charges to resolve emissions cheating allegations affecting nearly 600,000 vehicles. The scandal known as "Dieselgate" resulted in VW paying a $2.8 billion criminal fine, though total fines, penalties, civil damages and restitution have neared $35 billion, the automaker said in 2020.

European automakers pushed "clean diesel" technology to meet increasingly stringent environment rules, but the vehicles were polluting more than they did during tests certifying them for sale. Dieselgate resulted in regulators cracking down on automakers accused of using illegal software, called defeat devices, to pass government testing. 

The industry has since shifted to electrified vehicles to cut emissions. Stellantis is investing $35.5 billion into electrification and software by 2025 and says more than half of U.S. sales will be all-electric by the end of the decade.

bnoble@detroitnews.com

Twitter: @BreanaCNoble

rsnell@detroitnews.com

@robertsnellnews