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VW

VW exec pleads guilty to emissions cheating

A Volkswagen engineer is expected to help the US pursue its criminal case against the German automaker after pleading guilty Friday to helping create the illegal emissions-cheating device installed on VW diesel cars.

VW exec pleads guilty to emissions cheating
The EA189 engine was installed in the VW Beetle, the VW Jetta, the Sportwagen, the Golf, and the Audi A3 TDI among other diesel cars. Photo: Davi Sanchez/Flickr
A Volkswagen engineer is expected to help the US pursue its criminal case against the German automaker after pleading guilty Friday to helping create the illegal emissions-cheating device installed on VW diesel cars.
   
James Liang, 62, agreed to cooperate with US prosecutors developing a criminal case against Volkswagen, after he was indicted in Detroit federal court for his role developing the emissions “defeat devices” equipped on more than a half-million cars sold in the United States.
   
As an engineer in Germany, Liang helped develop the engines equipped the defeat devices from the earliest stages, said the indictment. He is the first official to be indicted in the US in the now-global scandal involving 11 million diesel cars sold worldwide.
   
“Almost from the beginning of VW's process to design its new 'clean diesel' vehicles, Liang and his fellow co-conspirators designed these VW diesel vehicles not to meet US emissions standards, but to cheat the testing process by making it appear as if diesel vehicles met US emissions standards when, in
fact, they did not,” the Justice Department said in a 24-page indictment.
   
Liang worked on the defeat devices from November 2006 while at Volkswagen headquarters in Wolfsburg, Germany. He and other VW employees developed a complex software system to keep emissions low when a car was undergoing testing to demonstrate environmental compliance, but to allow them to spew higher emissions on the road while boosting fuel efficiency, the indictment said.
   
He moved to California in 2008 as Volkswagen ramped up its marketing of its ostensibly “clean diesel” cars with high fuel efficiency in an effort to win greater market share in the US.
   
His job title in the US was “Leader of Diesel Competence,” although he still reported to VW officials in Germany.
   
The indictment said Liang and others consistently misrepresented the system to federal and state environmental regulators and lied about the issue when regulators probed the discrepancy between the cars' testing and real-world emissions performance.
   
“Liang and his co-conspirators attempted to make it appear that there were innocent mechanical and technological problems to blame, while secretly knowing that the primary reason for the discrepancy was the defeat device installed in every VW diesel vehicle sold in the United States.”
   
He faces a maximum penalty of five years in prison and a fine up of to $250,000.
   
Liang reportedly expressed remorse to the court. “I know VW did not disclose the defeat device to US regulators, in order to sell the cars in the US,” Liang said, according to Bloomberg News. “That's
what makes me guilty.”
   
A Volkswagen spokeswoman declined to comment on Liang's indictment, but said the company “is continuing to cooperate with the US Department of Justice.”
 
Liang's cooperation could accelerate the US criminal probe into VW, resulting in a large financial penalty, according to a person familiar with the government's thinking.
   
One outcome could be a deferred prosecution agreement similar to those that resolved earlier criminal cases against General Motors and Toyota for $900 million and $1.2 billion.
 
 That would allow the company to escape criminal conviction as long as it complies with certain requirements in a deal with the justice department.  Volkswagen settled civil cases in June over cheat devices on two-liter
engine diesel cars sold in the US in an agreement valued at $14.7 billion that requires it to buy back or fix vehicles, and pay each owner up to $10,000.
   
It still has to reach a similar deal for its cars with three-liter diesel engines.
   
Volkswagen has faced global condemnation since US and California state regulators exposed the emissions-cheating conspiracy in September 2015. The European Commission on Monday urged member states to crack down on Volkswagen for violating consumer protection laws, while Australia's consumer
watchdog filed suit against the company on September 1.
   
Some analysts have estimated the scandal could cost the company $30 billion or more.

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VW

Five things to know about Germany’s ‘dieselgate’ scandal

The emissions cheating scandal, which on Tuesday saw three Volkswagen chiefs charged and its rival Daimler heavily fined, has had major repercussions for the car industry since it broke four years ago.

Five things to know about Germany's 'dieselgate' scandal

Exposed in 2015

On September 18th, 2015, the US Environmental Protection Agency (EPA) reported that VW had installed illegal “defeat devices” in hundreds of thousands of engines in the United States since 2009.

The software — used in the Volkswagen, Porsche, Audi, Seat and Skoda brands — helped the cars meet exhaust pollution standards when monitored in tests even though their emissions actually exceeded the limits.

It meant that some cars spewed out up to 40 times more harmful nitrogen oxide — linked to respiratory and cardiovascular diseases — than legally allowed.

The company later admitted that 11 million diesel vehicles worldwide, including 8.5 million in Europe and 600,000 in the United States, had been fitted with the software, most of them in the VW brand.

SEE ALSO: 'Dieselgate': German prosecutors charge former Audi boss with fraud

Legal fall-out

VW chief executive Martin Winterkorn, who stepped down five days after the scandal broke, was in April 2019 charged with serious fraud, unfair competition and breach of trust.

Eight former and current executives and an Audi official have been charged in the United States, including Winterkorn.

Audi chief executive Rupert Stadler was charged in July 2019 with fraud, falsifying certifications and illegal advertising in connection with the “defeat devices”.

Former Audi head Rupert Stadler at a press briefing in 2018.

VW's guilty plea to a US criminal case in March 2017 settled its legal entanglements there, bringing to around $22 billion the amount it agreed to pay in fines and compensation to owners and dealers and for environmental clean-up.

The group still faces investigations and lawsuits around the world, in Europe the countries include Britain, France, Germany, Italy and Poland.

Costs for VW

The scandal has so far cost VW around 30 billion in fines, compensation and buybacks, mainly in the United States.

The company announced a net loss of nearly €1.6 billion in 2015, its first in 20 years, after setting aside billions to cover the costs of the dieselgate.

In June 2018 it agreed to pay a 1 billion fine in Germany, admitting its responsibility for the diesel crisis.

Audi agreed in October 2018 to pay an 800 million fine and Porsche was in May 2019 ordered to pay a fine of 535 million.

Other carmakers?

Tests in the wake of the scandal found that diesel engines by other carmakers were also more polluting on the road than during testing.

But none have so far admitted to mass cheating.

However Mercedes-Benz maker Daimler was in June 2018 ordered to recall 774,000 diesel vehicles across Europe because they too were fitted with illegal “defeat devices”.

Fiat Chrysler agreed in January 2019 to a pay $515 million to settle claims it installed the software.

And in February 2019 German prosecutors fined high-end carmaker BMW 8.5 million euros over diesel cars with higher harmful emissions than allowed, though they found no criminal wrong-doing.

Opel is also being investigated.


A worker holds up a Volkswagen badge at the VW plant in Wolfsburg. Image: DPA

Market reaction

A study released in March 2017 said that pollution from 2.6 million rigged VW cars sold in Germany would likely cause 1,200 premature deaths in Europe because of the excess emissions.

In Germany more than 410,000 customers are demanding compensation, as are
investors.

More generally, European drivers appear to have largely shrugged off the controversy while VW sales have fallen in the United States.

VW said in July 2019 it expects “slightly higher” unit sales for the year than in 2018.

SEE ALSO: VW sees steady profits in 2018 results

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