By on July 10, 2017

VW logo, Image: Volkswagen

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]

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10 Comments on “VW Bosses Told Full Emissions Costs Months Before Coming Clean: Report...”

  • avatar


    Every day another rock layer. Where is the bottom of this hole?

  • avatar

    Is there anybody, anywhere, surprised by this?

    I mean, in a company infamous for central control of everything, the idea that some rogue tiny group somewhere would, on their own, decide to do something this radical (radically bone-headed) without a peep to the muckity-mucks until forced to confess to the feds is more than a bit far-fetched.

    And what were these execs thinking? Did they really think their minions would be so loyal as to fall on their proverbial swords and accept the ruination of their careers (and even jail time) instead of spilling their guts on the Big Fish the authorities have been angling for the whole time? Assuming this meeting happened, is there any possible world in which its existence would not have been leaked?

    The more work the authorities have to do to pin you to the mat, the less willing they get to cut a generous deal. If VW had just waved the white flag the second that testing center in WV caught them red-handed, they would have escaped with a nominal fine per vehicle and a solemn promise to Go Forth and Sin No More; probably wouldn’t have even needed to fix the cars.

    But treating everybody in the government involved as idiots? Hell Hath No Fury Like a Regulatory Agency Scorned.

    • 0 avatar

      This in no way implies that the executives approved the cheating, nor that they knew about it prior to the investigation. This meeting took place after VW had been under investigation for some time and had responded with a proposed fix that CARB quickly saw through. When faced with the fact that they weren’t going to avoid some big fines, and would probably be on the hook for a large expensive recall, the emissions people finally admitted to the higher ups that they had cheated and presented an estimate of just how screwed they were.

      Note I’m not saying they didn’t know prior to this as I would have expected the executives to have been informed earlier in the investigation. If not from the beginning, at least from the point when they issued the proposed fix detailing the costs associated with reprogramming all of the suspect vehicles.

      • 0 avatar

        Once it was clear that CARB and the EPA weren’t going to let this go, (which certainly had happened by the time this meeting occurred), the sensible thing to do would have been to confess as soon as this bombshell was dropped. Spending several more months insulting the intelligence of every government scientist and regulator involved was not going to improve matters.

        • 0 avatar

          I fully agree, and in fact this revelation will certainly lead to problems for those execs who didn’t come clean as soon as they knew, if only due to the securities regulations.

  • avatar

    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.

  • avatar

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

    • 0 avatar

      I hear what you are saying, plus there are real bodies with names and families that you can point to from GM’s faulty ignitions.

      But, I will point out that the government had already paid GM to stay in business before that scandal broke, so…there’s that. There is also, at least in my knowledge of the subject, no deliberate act/conspiracy, more like negligence and it was most likely not known by upper management until after the damage was done.

      Maybe its like the difference between a gerbil and hamster, but the fact that there is no conspiracy at work in GM’s case probably makes all the difference…at least to regulators and those that levy the fines.

    • 0 avatar

      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.

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