Deception went beyond ‘couple of software engineers,’ New York attorney general says
http://www.wsj.com/articles/vw-emissions-cheating-was-prolonged-widespread-new-n-y-l
Volkswagen AG’s emissions cheating spanned more than a decade and arose from deliberate efforts by dozens of employees to mislead regulators and consumers about diesel-powered vehicles, according to a lawsuit from New York’s top law-enforcement official.
The decision to use software to manipulate emissions tests traced back as far as 1999, when engineers at the company’s Audi luxury unit developed technology to quiet diesel vehicles, according to a lawsuit filed Tuesday by New York Attorney General Eric Schneiderman. The technology, rolled out in 2004, made vehicles exceed European emissions standards, so the engineers added software they called “acoustic function” to turn it off during emissions tests, the lawsuit said.
Volkswagen eventually developed the software, known as defeat devices, for diesel vehicles sold in the U.S. starting in 2008. The German auto maker in September admitted to U.S. environmental regulators that the vehicles used software that allowed them to pollute on the road up to 40 times the amount allowed. The Environmental Protection Agency’s subsequent disclosure of the cheating sparked probes across the globe and forced the resignation of Chief Executive Martin Winterkorn.
The latest lawsuit cites emails and other documents to allege a prolonged effort among dozens of Volkswagen employees in the U.S. and Germany to equip vehicles with the devices and stonewall inquiries from regulators. The deception went far beyond the “couple of software engineers” whom Michael Horn, then Volkswagen’s top U.S. executive, blamed in October, according to the lawsuit. Some managers, engineers and executives named in the suit haven’t been previously identified; others have been suspended or resigned since regulators disclosed the cheating.
In June, Volkswagen agreed to pay up to $15 billion to settle claims with environmental regulators, owners of 475,000 vehicles with two-liter diesel engines and some state authorities. The company still faces legal claims affecting more than 80,000 three-liter diesel vehicles and a U.S. Justice Department criminal probe. The software is on some 11 million vehicles world-wide, Volkswagen has said.
‘It is regrettable that some states have decided to sue for environmental claims now... ’
Mr. Schneiderman’s suit seeks up to $450 million in civil penalties for what it calls Volkswagen’s “egregious and pervasive violations” that “strike at the heart” of state environmental laws, and were “the result of a willful and systematic scheme of cheating by dozens of employees at all levels of the company.” Massachusetts and Maryland filed similar lawsuits on Tuesday.
A Volkswagen spokeswoman called Tuesday’s allegations “essentially not new,” adding the company has been addressing them in discussions with U.S. and state authorities. “It is regrettable that some states have decided to sue for environmental claims now, notwithstanding their prior support of this ongoing federal-state collaborative process,” she said. Volkswagen declined interviews with those individuals mentioned in the New York suit.
In 2006, Volkswagen engineer James Liang developed a defeat device for a Jetta diesel car and eight years later conducted tests to help conceal emissions-cheating, according to the lawsuit. Oliver Schmidt, who headed Volkswagen’s U.S. regulatory compliance office in 2014 and early 2015 also played a key role in the deception, the lawsuit alleged.
Earlier
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Volkswagen has settled emissions claims with regulators and owners of about a half million diesel-powered vehicles. The settlement terms were announced Tuesday by environmental regulators. The WSJ's Lee Hawkins explains.
A 2007 Volkswagen memo recapping a meeting with California regulators said a state official “expects emission-control systems to work during conditions outside of the emissions tests. Volkswagen agrees,” according to the lawsuit. Instead, Volkswagen engineers and executives developed and implemented emissions-increasing defeat devices “as part of the normal course of business,” the lawsuit alleged.
In May 2014, a senior Volkswagen executive warned then-CEO Mr. Winterkorn of growing suspicions from regulators and that the company couldn’t explain dramatic emissions increases, the lawsuit said. A year later, a manager admonished a Volkswagen official in the U.S. for allowing another employee to send a frank email expressing concerns, it added.
The emissions-cheating scandal began in earnest in late 2006, when Volkswagen, facing engineering challenges, adapted technology Audi had developed to address other emissions problems and installed the defeat-device software on hundreds of thousands of Jetta, Golf and other cars, the lawsuit alleged. Cars with model years 2009 through 2015 ended up with the software.
In October 2006, many Volkswagen executives held a conference call with California regulators, with the latter requesting additional details on emissions-control devices.
‘Do we need to discuss next steps? Come up with the story please!’
Later that year, Leonard Kata, a Volkswagen emissions regulations and certification manager, emailed colleagues that government officials were interested in whether emissions-control devices were illegal defeat devices and detailed how agencies make such determinations, said the lawsuit.
Volkswagen executives in subsequent years discussed the development and use of defeat devices to dupe emissions tests, including a direct report to Mr. Winterkorn, the CEO; heads of Audi’s powertrain development; and other Volkswagen division heads and employees below them, the lawsuit alleged.
After learning in spring 2015 that California regulators planned to conduct further tests on vehicles, internal Volkswagen emails “began to reflect desperation and panic,” the lawsuit said. One engineering executive conveyed “serious concern regarding” what California’s tests “would expose,” the lawsuit alleged. “Do we need to discuss next steps?” the engineering executive wrote, according to the lawsuit. “Come up with the story please!”
A senior emissions-compliance manager in the U.S. for Volkswagen, meanwhile, expressed concern in a May 2015 email that requests for information from California regulators were “not a normal process and that we are concerned that there may be possible future problems/risks involved.”
The email added that Volkswagen’s software was being reviewed by top officials at California’s environmental agency, according to the lawsuit.
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