Volkswagen Executives Implicated in Diesel-Cheating Scandal

Volkswagen building

High-ranking Volkswagen officials, including the automaker’s current and former chief executive officers, were implicated in the emissions scandal today following a nine-month multistate investigation.

Volkswagen admitted in September 2015 that it had equipped hundreds of thousands of diesel-engine vehicles in the U.S. and millions worldwide with defeat devices, which allowed the vehicles to pass emissions tests despite emitting more pollution than allowed. In the weeks after the scandal went public, Volkswagen’s top U.S. executive Michael Horn denied that top executives were involved and said the use of the defeat devices appeared to be the work of a “couple of software engineers.” Horn has since resigned as CEO of Volkswagen of America.

However, the attorneys general of New York, Maryland and Massachusetts allege that Volkswagen executives were involved in the decision to conceal and cover up use of the illegal technology. New York Attorney General Eric Schneiderman (D) said today that the illegal activity was the result of a “willful and systemic scheme” that involved dozens of Volkswagen employees, including former CEO Martin Winterkorn.

“This was a widespread conspiracy involving many many people,” Schneiderman said.

Maryland Attorney General Brian Frosh (D) said during a press conference that the cover-up of the emissions cheating was “approved and orchestrated at the highest levels of the company.” Despite years of illegal activity that dozens of employees, corporate officers and senior executives were aware of, “not a single employee came forward to blow the whistle,” Frosch said.

Current CEO Implicated.

A lawsuit filed by New York today also implicated current Volkswagen CEO Matthias Müller, who was an executive at Volkswagen subsidiary Audi before replacing Winterkorn in fall 2015.

The lawsuit claims that Müller was made aware in 2006 that 3.0-liter diesel vehicles made by Volkswagen would have difficulty meeting federal emissions standards in the U.S. Volkswagen ultimately decided to avoid the cost of installing the necessary equipment to bring the vehicles into compliance, instead opting to use illegal software, New York alleges.

Schneiderman told reporters today that the investigation showed Müller was “clearly in the loop” on the emissions issues.

Documents Allegedly Destroyed.

The lawsuit also claims that at least eight Volkswagen employees within the company’s engineering departments destroyed evidence in late August 2015, shortly before the company admitted its use of defeat devices.

Those employees allegedly purged documents after receiving advice from an unnamed senior attorney in Volkswagen’s legal department in Germany. That lawyer allegedly told employees that it might soon be impossible to destroy or delete documents given the progression of the investigation by U.S. regulators.

Volkswagen in June reached a $14.7 billion settlement to resolve consumer claims and mitigate the environmental damage caused by the use of defeat devices. However, the company still faces possible civil penalties and criminal charges from the U.S. Justice Department. The state lawsuits filed today seek additional penalties.

Volkswagen spokeswoman Jeannine Ginivan told Bloomberg BNA in a July 19 e-mail that the allegations included in the state complaints are “essentially not new” and have the focus of discussions with federal and state authorities.

“Volkswagen continues to work cooperatively with the U.S. Department of Justice, the Environmental Protection Agency and the California Air Resources Board on a comprehensive national resolution of all remaining environmental issues arising from the diesel matter,” the spokeswoman said. “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.”