Stellantis unit nears plea deal in U.S. emissions fraud probe, report says

Stellantis, the automaker formerly known as Fiat Chrysler Automobiles, is nearing an agreement to plead guilty to criminal conduct to resolve a multiyear emissions fraud probe surrounding Ram pickup trucks and Jeep SUVs with diesel engines, people familiar with the matter said.

Lawyers for the automaker and U.S. Justice Department officials are brokering a plea deal that could be unveiled in coming weeks and include financial penalties totaling between $250 million and $300 million, the people said.

Such a resolution would come more than four years after Volkswagen Group pleaded guilty to criminal charges to resolve its own diesel-emissions scandal involving nearly 600,000 vehicles.

The investigation, which began before FCA merged with PSA Group to form Stellantis, focuses on roughly 100,000 diesel-powered vehicles that allegedly evaded emissions requirements. The plea negotiations are fluid and some terms, including the size of any financial penalties, could change as discussions continue, the people said.

Justice Department officials are preparing paperwork that will likely be negotiated with FCA to finalize the plea deal, which could result in changes and also present an outside chance for the agreement to fall apart, the people said. FCA is still the legal entity involved in the case.

A plea agreement would cap a series of investigations dating back to 2015 surrounding diesel-powered vehicles in FCA’s U.S. lineup. The affected vehicles span model years 2014 to 2016.

Representatives for Stellantis and the Justice Department declined to comment.

The discussions are heating up as one of FCA’s employees prepares to face trial next year on charges he misled regulators about pollution from the vehicles, and continued the deception even after officials caught Volkswagen cheating on government emissions tests.

In April, the Justice Department unveiled charges against two additional FCA employees in the alleged emissions fraud. Italian authorities arrested one of the two additional employees in September.

An indictment alleges the employees conspired to install illegal software known as defeat devices in vehicles so they could dupe government emissions tests and then pollute beyond legal limits on roadways.

FCA has previously resolved related civil allegations while denying it deliberately attempted to cheat on emissions tests.

Initially, when the EPA initially found in 2017 that FCA was using hidden software to allow excess emissions to go undected, the late former CEO Sergio Marchionne angrily rejected those findings.

He even suggested regulators had a “belligerent” view of automakers. “We don’t belong to a class of criminals,” he said. “We’re not trying to break the bloody law.”

Other legal troubles have also dogged the automaker. In March, the company pleaded guilty to violating U.S. labor law, admitting it conspired to make illegal payments to union officials.

The criminal case against FCA is expected to track closely with one against Volkswagen that the Justice Department unveiled in 2017, the people said.

Volkswagen admitted to cheating on government emissions tests with diesel-powered vehicles, in the process misleading the EPA and customers. The German automaker pleaded guilty to charges including conspiracy to defraud the United States, commit wire fraud and violate the Clean Air Act.

Volkswagen agreed to pay $2.8 billion to resolve that criminal case, and billions of dollars more to settle Justice Department civil allegations and lawsuits from vehicle owners and state officials.

FCA, meanwhile, spoke with senior Justice Department officials in recent months to push back against a demand that the company plead guilty, the people familiar with the matter said.

The automaker instead argued for a so-called deferred prosecution agreement, the people said. In such agreements, a company is criminally charged and agrees to monitoring and other conditions instead of pleading guilty. If the company abides by the agreement, prosecutors later ask a judge to dismiss the charges.

Justice Department officials rejected FCA’s request for the more lenient treatment.

In talks with U.S. prosecutors, FCA has emphasized the automaker’s January 2019 agreement to pay roughly $800 million to settle civil litigation brought by the Justice Department, state officials and consumers alleging the company’s vehicles evaded emissions requirements, one of the people said.

Separately, FCA this year resolved legal claims from customers who opted out of the earlier settlement with consumers, according to court records.