Last week brought new developments in the Volkswagen defeat device uproar representing more trouble for one of the world's largest carmakers.
On Tuesday July 19, New York and Massachusetts commenced lawsuits against VW for unspecified penalties. While reportedly having admitted to equipping 11 million diesel-powered vehicles worldwide with software for emission test imprecision —‘the defeat device’—Volkswagen has maintained throughout the unfolding that it was the work of a small group of people about which top management was completely unaware.
Based on internal Volkswagen documents, emails, and witness statements, these state lawsuits contend, however, that this was an orchestrated fraud carried out for over a decade by dozens of engineers, managers, and company directors.
Indeed, Eric Schneiderman, the New York attorney general reportedly said, “The allegations against Volkswagen, Audi, and Porsche reveal a culture of deeply rooted corporate arrogance, combined with a conscious disregard for the rule of law or the protection of public health and the environment.”
Maura Healey, the Massachusetts attorney general echoed these accusations.
These lawsuits allege that the defeat device was pioneered by Audi, which had developed noise reduction technology that eliminated the clattering noise that diesel engines tended to make after starting, but at the cost of increasing pollution to impermissible levels.
Audi’s answer to this problem, in turn, was new programing introduced in 2004 to detect emission testing and then turn off the noise reduction technology, hence reducing pollution to permissible levels.
This first iteration of the defeat device was called the “acoustic function.” In 2006, when Audi and Volkswagen learned that their three-litre diesel engines needed additional equipment to meet US emissions standards—a larger tank for the chemical solution that neutralizes nitrogen oxide emissions in the exhaust
Not wanting to incur the costs of redesigning to accommodate the larger tanks, the parties responsible allegedly identified another ‘problem’ for the defeat device ‘solution’.
When this decision was made, Matthias Mueller—now Volkswagen’s chief executive after Martin Winterkorn resigned soon after the accusation of deception was first made in September 2015—was head of project management at Audi.
The lawsuits allege that, in this capacity with Audi, Mueller was aware of the decision not to equip its diesels with the equipment necessary to meet US standards, although they don’t go so far as to accuse him “of having specific knowledge of the device.”
As to the defeat device ‘solution’, however, the New York lawsuit claims that more than two dozen Volkswagen engineers and managers were involved, and it specifically names the most senior individuals in both Audi and Volkswagen.
In Germany, strict privacy laws have limited German prosecutors to naming only Martin Winterkorn.
Reports say the penalties being sought “could easily be in the hundreds of millions of dollars. [And] If other states follow as expected, Volkswagen could face billions of dollars in extra costs.”
In June, Volkswagen agreed to pay a record US $15 billion to settle US claims by VW owners and regulators, but this still left room for lawsuits like the two brought last week.
Worldwide, including in the US, Volkswagen is also under criminal investigation and facing shareholder lawsuits.