Volkswagen made several defeat devices to cheat emissions tests - sources

Extract from Reuters

Business News | Sat Oct 17, 2015 4:16pm BST

Related: Business

BERLIN/LOS ANGELES/DETROIT | By Andreas Cremer, Bruce Wallace and Paul Lienert

A worker cleans the facade of a Volkswagen dealership near the Andalusian capital of Seville, southern Spain, October 16, 2015.

Reuters/Marcelo del Pozo

Volkswagen (VOWG_p.DE) made several versions of its "defeat device" software to rig diesel emissions tests, three people familiar with the matter told Reuters, potentially suggesting a complex deception by the German carmaker.

During seven years of self-confessed cheating, Volkswagen altered its illegal software for four engine types, said the sources, who include a VW manager with knowledge of the matter and a U.S. official close to an investigation into the company.

Spokespersons for VW in Europe and the United States declined to comment on whether it developed multiple defeat devices, citing ongoing investigations by the company and authorities in both regions.

Asked about the number of people who might have known about the cheating, a spokesman at company headquarters in Wolfsburg, Germany, said: "We are working intensely to investigate who knew what and when, but it's far too early to tell."

Some industry experts and analysts said several versions of the defeat device raised the possibility that a range of employees were involved. Software technicians would have needed regular funding and knowledge of engine programmes, they said.

The number of people involved is a key issue for investors because it could affect the size of potential fines and the extent of management change at the company, said Arndt Ellinghorst, an analyst at banking advisory firm Evercore ISI.

Brandon Garrett, a corporate crime expert at the University of Virginia School of Law, said federal prosecution guidelines would call for the U.S. Justice Department to seek tougher penalties if numerous senior executives were found to have been involved in the cheating.  

"The more higher-ups that are involved, the more the company is considered blameworthy and deserving of more serious punishment," said Garrett.

VW, Europe's biggest carmaker, has been criticised by some lawmakers and analysts for blaming a small number of individuals for the banned software installed in up to 11 million vehicles worldwide, even while investigations continue.

Its U.S. chief, Michael Horn, told U.S. lawmakers earlier this month that he believed "a couple of software engineers" were responsible, while a letter dated Oct. 8 from VW to the European Parliament blamed "the misconduct of a few people."

MANY CHANGES

VW admitted publicly on Sept. 18 to using software that could tell when a diesel vehicle was being tested and temporarily lower its toxic emissions to pass U.S. regulations.

The scandal has wiped around a quarter off its stock market value and forced out its long-time chief executive.

When it started using defeat device software in 2008, VW installed it with the EA189 diesel engine. The software was subsequently added to the newer EA288 engine.

"VW would have had to reconfigure the software for each generation of engines," said the U.S. official close to an ongoing investigation into VW.

A U.S.-based expert on diesel engines and testing said the defeat device software also had to be altered when VW changed the emissions control system in its engines.

In older diesel models, VW used so-called Lean NOx Traps designed to reduce toxic nitrogen oxides in engine exhaust. From around 2012, it introduced a more sophisticated and expensive system called Selective Catalytic Reduction.

VW's Horn told U.S. lawmakers on Oct. 8 that different software was developed for Europe as well.

"Since the standards are different, my understanding is that the defeat devices in those (European) cars are as well," he said, without elaborating.

Horn added VW was withdrawing its application for regulatory certification of 2016 diesel models because it contained another software feature that had not been disclosed as required by the authorities.

(Additional reporting by Laurence Frost, Joel Schectman, Gilles Guillaume and Joe White; Writing by Mark Potter; Editing by Janet McBride)