Rumored: Volkswagen In Talks Over Two Funds As Part Of Their Punishment

Bloomberg reports that Volkswagen is in discussions with U.S. authorities to establish two funds as part of their punishment. Speaking to people close to the discussions, one of the funds will be overseen by the EPA to promote clean transportation in the U.S. The other fund would be administered by the state of California to promote zero-emission vehicles in the state. The discussions are continuing and many details are in flux according to the sources,

When reached for comment by Bloomberg, the California Air Resources Board, Department of Justice, EPA, and Volkswagen declined to comment.

What has taken so long for all of the parties to get to this point?

Sources explained that the talks began slowly as Volkswagen denied any wrongdoing target at the beginning. Then the German automaker went through a number of changes in leadership and legal advisers.

In recent weeks, the talks have started to make progress. Part of this is due to Francisco Javier Garcia Sanz, Volkswagen's head of purchasing and the longest-serving member of its management board taking over control of the talks.

Is there a reason for the funds?

Consider the U.S. Justice Department has filed a lawsuit against Volkswagen with fines possibly totaling $40 billion. At the moment, Volkswagen has only set aside 6.7 billion euros ($7.4 billion) for the scandal. The German automaker wants to do everything they can to make an overall deal that is manageable and won't sink them.

“The funds would resolve only part of VW’s liabilities in the U.S., but they would be the first clear signal that the company is willing to negotiate in a serious manner,” said Erik Gordon, a business professor at the University of Michigan.