VW Bosses Told Full Emissions Costs Months Before Coming Clean: Report

Matt Posky
by Matt Posky

Throughout the entirety of Volkswagen’s diesel emission scandal, the automaker has changed its tune on several occasions. After evading scrutiny from regulators for years, it finally admitted to installing illegal defeat devices designed to fool U.S. emission testing in late 2015. However, it assured the public that no high-ranking executive had complete knowledge of the misdeed until news of the scandal broke to outraged consumers.

Obviously, that was a lie. But no damning evidence came out indicating anyone above mid-level management had prior knowledge of the devices or any idea they would be so harmful to the company. But now a Volkswagen manager arrested earlier this year claims the automaker’s former chief executive and other top managers had been told the carmaker’s diesel emissions violations could cost up to $18.5 billion, well before the September 2015 announcement.

German newspaper Bild am Sonntag is reporting Oliver Schmidt, a VW executive arrested in Miami in January, informed ex-CEO Martin Winterkorn about the financial implications of the defeat devices on August 25, 2015. The newspaper said Schmidt told Winterkorn about the maximum possible penalty during an emergency meeting that also included Heinz-Jakob Neusser, VW’s then development chief, and Herbert Diess, VW’s current brand chief.

Citing documents relating to the continued U.S. investigation of Volkswagen, Bild am Sonntag also reported Winterkorn and Diess were informed VW had been using defeat devices at a meeting on July 27, 2015.

Germany will be keen to use this information in its own ongoing investigations into VW’s upper management. The country’s securities law mandates all firms publish any market-sensitive news swiftly and accurately. However, VW’s annual report for 2016 indicated its board members had been informed the costs associated with emissions scandal would be “controllable overall with a view to the business activities of Volkswagen Group.”

In Germany, the Stuttgart prosecutor’s office has been conducting a sweeping investigation into employees working Porsche, Audi, and Volkswagen. The probe now includes numerous members of Volkswagen Group’s top brass. Since Germany doesn’t extradite its citizens, the majority will be safe from U.S. prosecutors. That leaves local authorities to do much of the heavy lifting.

Last week, German prosecutors arrested Giovanni Pamio, an Audi employee and Italian national, on suspicion of fraud and false advertising. Pamio, who remains in custody, is also being sought by the U.S. Justice Department for his alleged role directing employees to design software allowing Audi vehicles to cheat U.S. emissions tests. His remains the only arrest outside of the United States.

[Image: Volkswagen]

Matt Posky
Matt Posky

A staunch consumer advocate tracking industry trends and regulation. Before joining TTAC, Matt spent a decade working for marketing and research firms based in NYC. Clients included several of the world’s largest automakers, global tire brands, and aftermarket part suppliers. Dissatisfied with the corporate world and resentful of having to wear suits everyday, he pivoted to writing about cars. Since then, that man has become an ardent supporter of the right-to-repair movement, been interviewed on the auto industry by national radio broadcasts, driven more rental cars than anyone ever should, participated in amateur rallying events, and received the requisite minimum training as sanctioned by the SCCA. Handy with a wrench, Matt grew up surrounded by Detroit auto workers and managed to get a pizza delivery job before he was legally eligible. He later found himself driving box trucks through Manhattan, guaranteeing future sympathy for actual truckers. He continues to conduct research pertaining to the automotive sector as an independent contractor and has since moved back to his native Michigan, closer to where the cars are born. A contrarian, Matt claims to prefer understeer — stating that front and all-wheel drive vehicles cater best to his driving style.

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  • Brettc Brettc on Jul 10, 2017

    I'm not surprised at all. VW could have gone to the doctor with a paper cut, instead they waited until their limb was gangrenous before doing anything about it.

  • Zip89123 Zip89123 on Jul 10, 2017

    VW should go into the ignition switch business. No one goes to jail and the US government pays them to stay in business.

    • See 1 previous
    • Erikstrawn Erikstrawn on Jul 11, 2017

      The only conspiracy I saw in the ignition switch case was GM's lawyers threatening to countersue families whose loved ones died. The legal staff at GM should have been fired for that.

  • Tassos Jong-iL The Peninsula of One Korea.
  • Eric No, I just share my opinions. I have no use nor time for rhetoric from any side.
  • Redapple2 Jeez. This is simple. I 75 and 696 area. 1 nobody -NOBODY wants to work in downtown Detritus. 2 close to the tech ctr. Design and Engineering HQ. 20 miles closer to Milford.3 lower taxes for the employees. Lower taxes for Evil GM Vampire.4 2 major expressways give users more options to suburbs. Faster transport.Jeez.
  • Clark The Ring (Nürburgring) is the only race track I've driven on. That was 1985 or 1986 with my '73 Fiat Spider (and my not-so-happy girlfriend). So I made the Karussell (today: Caracciola Karussell, which I believe the author meant; there is another one: Kleines Karussell).
  • AZFelix This article takes me back to racing electric slot cars with friends on tracks laid out in the basement. Periodically your car would stop due to lost connections or from flying off the track and you would have to dash over to it and set it right. In the mean time your competitor would race ahead until faced with a similar problem. It seemed like you were struggling harder to keep from losing than trying to win. Fun times.“History never repeats itself, but it does often rhyme.” Mark Twain