Volkswagens Former CEO Knew About Defeat Device in Early 2014
The role of Volkswagen AG's top management in the diesel emissions scandal came under increased scrutiny at the weekend, after a German newspaper reported that then-chief executive Martin Winterkorn knew about the risk of a U.S. investigation into the use of so-called defeat devices' as early as May 2014. The Sunday edition of the tabloid Bild-Zeitung German-language, paywall a mass-circulation tabloid, reported that a senior member of VW's staff had alerted Winterkorn in May about the fact that the Environmental Protection Agency and California Air Resources Board were zeroing in on excessive emissions of nitrogen oxides in VW's diesel cars. It said the alert was given in an internal memo that has been uncovered by the internal investigation being carried out at VW's order by law firm Jones Day. "There is no well-founded explanation for the dramatically higher NOx emissions that can be given to the authorities," the memo said. "It is to be suspected, that the authorities will examine the VW systems to see whether Volkswagen has installed engine management software a so-called Defeat Device.", It's the secondstill unconfirmedleak suggesting that knowledge of the problems went far higher, far earlier, than VW admits. The German magazine Manager' had alleged that the VW brand's management had already discussed the issue specifically, a letter from the EPA in the spring of 2014, citing minutes from the meeting.Winterkorn resigned in September, saying he hadn't known anything about the manipulations, which the company has suggested was the result of a conspiracy among a small circle of engineers. According to various German media reports, Winterkorn has told Jones Day that although he knew of an issue with excess emissions in the U.S. in May 2014, he wasn't aware of the use of defeat devices applied specifically to circumvent U.S. regulations. The head of VW's operations in the U.S. Michael Horn, has made similar arguments. The revelations may have an important bearing on the legal issues facing VW U.S. authorities are typically inclined to exact higher penalties for wrongdoing, the more senior management was aware of it. In addition, the revelation strengthens the case of investors suing VW for creating a false market in its shares by failing to disclose the extent of the problem earlier. The scandal wiped more than 25 billion off the company's shares initially.