(Adds details, IAV statement, background)
By David Shepardson and Mike Spector
WASHINGTON, Dec 18 (Reuters) - German auto supplier IAV Gmbh has agreed to plead guilty and pay a $35 million fine for conspiring to assist Volkswagen AG in its effort to evade U.S. diesel emissions standards, the U.S. Justice Department said on Tuesday.
IAV, which is 50 percent owned by Volkswagen, will serve two years of probation and be under the oversight of an independent monitor, the Justice Department said. Volkswagen has previously agreed to pay more than $25 billion in the United States, owing to claims from vehicle owners, environmental regulators, states and auto dealers, and has offered to buy back about 500,000 polluting U.S. vehicles.
Susan Bodine, assistant administrator of the U.S. Environmental Protection Agency, said in a statement that "IAV designed the software that allowed VW to cheat U.S. air emissions standards."
The Justice Department said it would have sought a higher fine but it could have jeopardized IAV's viability.
"We take these matters very seriously and see this resolution as an important step forward for our company,” said Kai-Stefan Linnenkohl, president and member of the IAV management board. "The misconduct identified does not reflect who we are as a company today. We are committed to a culture of compliance and accountability."
Volkswagen pleaded guilty in May 2017 as part of a $4.3 billion Justice Department settlement. In total, nine people have been charged in the diesel emissions scandal and two former VW executives have pleaded guilty and been sentenced to prison terms.
Justice Department official John Cronan said Tuesday in a statement the government's "investigation into emissions cheating is ongoing and we will follow the evidence wherever it leads."
IAV is set to plead guilty on Jan. 18 in Detroit.
Separately, the Justice Department has an ongoing investigation into alleged excess emissions from 104,000 Fiat Chrysler Automobiles diesel vehicles.
The company has denied any wrongdoing and said there was never an attempt to cheat emissions rules.
U.S. and California regulators stepped up scrutiny of diesel vehicles after Volkswagen admitted in 2015 to illegally installing software in U.S. vehicles for years to evade emissions standards.
Daimler AG said in 2016 it has received requests for information about its diesel emissions levels from U.S. regulators and that the Justice Department had asked it to investigate its emissions certification process.
Daimler has said it faced ongoing investigations by U.S. and German authorities into excess diesel emissions that could lead to significant penalties and recalls. (Reporting by David Shepardson in Washington and Mike Spector in New York; Editing by Tom Brown)