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Can VW’s Top Management Have Missed 10 Years Of Emissions Cheating?

Fully 10 years ago, Volkswagen saw an opportunity to sell more cars in the United States by introducing diesel-powered vehicles, known for their fuel economy and low greenhouse gas emissions. Still they belched another toxin, nitrogen oxide, and the company says its engineers found that they couldn’t yet meet U.S. emission standards, which are tighter than those in the European Union.

And so in 2005 VW decided to equip its engines with stopgap cheating software that would help the cars pass emissions tests until it could improve its diesel engine technology. But once that fix was avilable, the company didn’t use it and the cheating continued, VW said Thursday, though it didn’t say why.

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During a news conference at the company’s headquarters in Wolfsburg, Germany, Hans-Dieter Poetsch, the chairman of VW’s supervisory board, didn’t call it a top-down culture of cheating. Instead he said, “It proves not to have been a one-time error, but rather a chain of errors that were allowed to happen.”

Poetsch maintained the company’s position that the guilt lies solely with a few employees, including some senior managers, who operated under weak corporate oversight. He also cited an attitude “in some areas of the company that tolerated breaches of the rules.”

Poetsch confirmed reports that nine employees suspected of wrongdoing had been suspended, but stressed that the company was far from determining whether they actually were involved in the cheating. Similarly, he said, the company’s digital technology and quality-control procedures for engines were “insufficient” for detecting the presence of cheating software.

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A U.S. law firm, Jones Day, is conducting an independent investigation of the cheating to determine who was responsible, but Poetsch said its findings probably will not be available for months. After all, he noted, the firm is questioning more than 380 VW employees and examining 1,500 computers, smartphones and other sources of data totaling 102 terabytes – 102 trillion bytes – of information.

“One thing is clear: We are in the middle of the greatest test this company has ever faced,” Poetsch said. As for the culprits, whenever they are identified, he said, “You can be certain: These people will be brought to justice.”

The cheating scandal was discovered by the U.S. Environmental Protection Agency (EPA) in September, and VW admitted that its employees had fitted the deceptive software, known as a “defeat device,” in 11 million of its cars sold around the world, nearly 500,000 in the United States. That led to the immediate resignation of CEO Martin Winterkorn, who was replaced by Matthias Mueller.

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VW also has set up a whistleblower-protection program to encourage employees to provide information about the scandal, and about 50 VW workers have taken part. Employees taking advantage of the program would be indemnified from being fired, but not from criminal prosecution.

At first, the defeat devices were found only on VW’s 1.6-liter and 2-liter diesel engines used for cars under the VW brand, as well as other auto makes, including Audi, SEAT and Skoda. Last month the EPA said they also were used in 3-liter engines in Audis, Porsches and VWs. The company has since admitted to underrating the fuel efficiency and greenhouse gas emissions for as many as 800,000 gasoline-powered cars, most of them in Europe. It has since revised that number down to 36,000.

The company is now the object of three criminal investigations, one in the United States and two in its home country. Prosecutors in Braunschweig, Germany, who have jurisdiction over Wolfssburg, have mounted two probes of the scandal.

By Andy Tully Of Oilprice.com

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