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Reacquired Volkswagen and Audi diesel cars sit in a desert graveyard near Victorville, California, U.S. March 28, 2018.

LUCY NICHOLSON/Reuters

German automotive giant Volkswagen AG was ordered Wednesday to pay a $196.5-million fine to the Canadian government after pleading guilty in an emissions-cheating scandal.

Justice Enzo Rondinelli handed down the record-setting fine hours after the automaker formally pleaded guilty to all 60 charges it was facing.

The Crown and Volkswagen jointly suggested the penalty, which falls short of the maximum $265-million the company could have been forced to pay. But prosecutors said the penalty is more than 20 times higher than Canada’s previous record environmental fine, a contention Justice Rondinelli supported as he ushered in what he described as new standards for environmental accountability.

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“The proposed fine here indicates that a new era of environmental protection is upon us,” Justice Rondinelli said in his decision. “The proposed fine here would be the biggest fine imposed in Canada for an environmental infraction, by a wide margin.”

Volkswagen and the Crown submitted an agreed statement of facts in a Toronto court, acknowledging the company imported 128,000 Volkswagen and Audi vehicles, along with 2,000 Porsches, that violated the standards.

Reading from the statement, prosecutor Tom Lemon noted that certain supervisors and other employees at Volkswagen “knew that VW was using software to cheat the U.S. testing process,” the results of which are used by Canadian authorities.

The federal government charged the auto giant last month with 58 counts of illegal importation under the Environmental Protection Act and two counts of providing misleading information.

The penalty proposed by both sides was significantly higher than the $7.5-million fine incurred by a mining company in 2014.

The money paid by Volkswagen would go to the Environmental Damages Fund, and both parties suggested distributing it to the provinces and territories based on how many affected vehicles were sold in each jurisdiction.

The statement of facts notes that the automaker has already tried to make some amends in Canada.

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Volkswagen “has devoted significant resources to, and undertaken extensive measures for, the remediation of the subject vehicles,” Mr. Lemon read in court.

“VW settled Canadian consumer claims by providing compensation and benefits for emissions modification and buyback options to remediate the subject vehicles … or remove them from the road.”

Those settlements, according to the document, provided benefits “of up to a potential maximum” of $2.39-billion, and were completed by Aug. 31, 2019.

But the company refused to admit any actual human or environmental harm caused by its pollution, saying only that the scheme had the potential to cause harm.

In court last month, defence lawyers said they intended to plead guilty, but the resolution was delayed while three people sought to make victim impact statements and provide other input.

Justice Rondinelli ruled against them, saying it’s not their role to prosecute the company accused of harming them.

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Mr. Lemon said at the time he would gather victim impact statements and review them before submitting them to the court on Jan. 22, in line with the typical process.

On Wednesday, prosecutors argued that the “community impact statement” turned in to them was not admissible in court. The seven-page document – accompanied by 520 pages of reference materials – was an attempt to enter untested expert testimony into the record, they said.

Justice Rondinelli accepted that argument.

“We are at a sentencing hearing, not a trial,” he said.

Volkswagen previously pleaded guilty in U.S. court to three felonies in 2017 and was fined $4.3-billion. German prosecutors fined the company €1-billion ($1.5-billion) in the emissions-cheating case in 2018.

Several company executives and managers were also charged in the United States and Germany, and some were sent to prison.

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