Germany Engineering Firm Pleads Guilty to Involvement in VW Emissions Scandal

IAV GmbH, the German engineering company co-owned by Volkswagen Group, plead guilty to a felony count of conspiracy in a U.S. District Court on Friday, to the surprise of absolutely no one. Last month, authorities said the firm had already agreed to a guilty plea and multi-million-dollar fine for its role in helping Volkswagen Group develop software that could effectively help cars falsify emissions test results.

That makes the courtroom officiation little more than a formality. While the court wants to conducts a probationary investigation, effectively delaying sentencing until May 22nd, there is little doubt what the final penalty will be — $35 million and two years of operation under the supervision of a court-appointed monitor.

“The proposed agreement is an important step forward for IAV,” Kai-Stefan Linnenkohl, the company’s president, said in a prepared statement on Friday. “The misconduct identified does not reflect who we are today as a company, business partner or employer … We are committed to a culture of compliance and accountability and will continue to serve our customers as a reliable partner, providing the high level of service, quality and innovation they have come to expect.”

According to Automotive News, IAV’s penance has to be set at $35 million because the court couldn’t legally impose a “higher fine amount without jeopardizing its continued viability.” The company’s involvement has been deemed essential in creating the emission’s scandal that rocked Volkswagen and, more recently, brought Audi managers up on charges.

However, most of Audi’s problems relate to the 3.0-liter turbodiesel motors, whereas IAV’s involvement relates to the 2.0-liter diesels.

From Automotive News:

The software developed by IAV, headquartered in Berlin with offices in suburban Detroit, enabled Volkswagen to cheat on emissions testing to win certification for its Gen 1 2.0-liter turbodiesel vehicles, beginning in the 2009 model year.

Appearing before U.S. District Judge Sean Cox Friday morning, IAV pleaded guilty to one count of conspiracy to defraud the U.S. and the automaker’s customers in the U.S. to violate the Clean Air Act. The engineering company had agreed to plead guilty in a plea agreement last month.

IAV’s plea documents claim that engineers “delegated certain tasks associated with designing its [Gen 1] diesel engine to IAV, including parts of software development, diesel development and exhaust aftertreatment.”

“In November 2006, a VW employee requested that an IAV employee assist in the design of defeat device software for use in the diesel engine. The IAV employee agreed to do so and prepared documentation for a software design change to recognize whether a vehicle was undergoing standard U.S. emissions testing on a dynamometer or it was being driven on the road under normal driving conditions.”

Volkswagen Group later used the software’s ability to distinguish between testing and normal driving in order to achieve emissions certification. The Justice Department believes at least one IAV manager knew the purpose of the defeat device software by 2008 and instructed IAV employees to continue working on the project anyway. But prosecutors have said the company’s involvement was relatively minor when taking the larger picture into account.

“IAV’s role in this offense is not like the role of VW in this offense,” assistant U.S. Attorney John Neal said on Friday.

[Image: Volkswagen]