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CAR TECH
Germany launches criminal probe against VW's ex-CEO
By Simon MORGAN
Frankfurt (AFP) Sept 28, 2015


VW Skoda says 1.2 mn cars fitted with pollution-cheating software
Prague (AFP) Sept 28, 2015 - Skoda, the Czech carmaker within the Volkswagen group, said Monday that over a million cars were fitted with pollution cheating software to dupe emissions tests.

"I can confirm that where the Skoda brand is concerned, there are 1.2 million cars that were produced," said Skoda spokesman Jozef Balaz.

Volkswagen sparked global outrage last week when it admitted that 11 million of its diesel cars worldwide are equipped with so-called defeat devices that activate pollution controls during tests but turn them off when the car is on the road.

"We are talking about previously produced EA 189 motors which are now in use," Balaz said in a statement, adding that the vehicles in question were "completely safe in everyday use".

"All new Skoda cars equipped with diesel motors on sale in the European Union fulfil the Euro 6 emissions norm," he said.

Earlier Monday Volkswagen's top-of-the-range automaker Audi said that 2.1 million of its diesel cars were also fitted with the sophisticated software enabling them to cheat emission tests.

German prosecutors also announced Monday a criminal probe against Volkswagen's former chief executive Martin Winterkorn, who resigned over the scandal.

The carmaker named Matthias Mueller, head of VW's luxury sports car brand Porsche, as his successor.

German prosecutors on Monday announced a criminal investigation against Volkswagen's former chief executive as the government pressed the embattled auto giant to resolve a pollution cheating scandal that has rocked the auto sector.

The affair will also be on the agenda when the European Union's 28 trade or industry ministers gather in Luxembourg this week for the first high-level meeting in Europe on the VW crisis since it erupted last week.

In Germany, public prosecutors in the northern city of Brunswick said they have launched a criminal probe against Martin Winterkorn, who resigned as VW's CEO after the group revealed that 11 million of its diesel vehicles are equipped with devices that fool official pollution tests.

In his resignation statement, the 68-year-old manager, a renowned perfectionist in the industry, said he was "not aware" of having done anything wrong.

The carmaker's supervisory board also appeared to absolve him initially, insisting that Winterkorn -- who as Germany's highest-paid executive could under normal rules stand to pocket a payout of around 60 million euros ($67 million) -- had not been aware of the fraud.

- Chain of responsibility -

But prosecutors said they were looking to establish the exact chain of responsibility in the scam, which is snowballing into one of the biggest ever in the European automobile industry and threatening to tarnish Germany's pristine engineering reputation.

"Following a number of legal suits, the public prosecutors in Brunswick have opened an investigation against Martin Winterkorn, the former chief executive of Volkswagen," they said in a statement.

"The investigation will focus on the allegation of fraud by selling vehicles with manipulated emission values," it added.

VW Friday announced it was replacing Winterkorn with the head of VW's luxury sports car brand Porsche, Matthias Mueller.

The new 62-year-old boss faces daunting challenges as he seeks to steer VW out of the wreckage left by the affair.

The German government has given Volkswagen until October 7 to submit measures and a timetable to fix vehicles that have been fitted with the cheating software, a ministry spokesman said Monday.

The devices can switch on pollution controls when they detect the car is undergoing testing. They then switch off the controls when the car is on the road, allowing it to spew out harmful levels of emissions.

- Ignored warnings -

According to German media reports at the weekend, Volkswagen ignored warnings from staff and a supplier years ago that the emission test rigging software was illegal.

The scandal has tarnished VW's name, left it exposed to up to 18 billion dollars (16 billion euros) in US fines, and wiped a third off its stock market value in a week.

Volkswagen's top-of-the-range automaker Audi said that 2.1 million of its diesel cars worldwide are among the 11 million fitted with the so-called defeat devices. Czech subsidiary Skoda said 1.2 million of its vehicles were affected.

The environmentalist group Greenpeace lashed out at VW's piecemeal communication of the scandal, especially after new CEO Mueller promised a "ruthless" investigation into the affair and a "fresh start".

In addition to Germany, national authorities in several other countries have announced probes. And lawsuits are being filed, including class-action suits in the United States.

VW's diesel vehicles are coming under close regulatory scrutiny worldwide and France has even extended the checks to cars made by other manufacturers.

VW was not immediately available on Monday to comment on the news of the criminal investigation against Winterkorn, or media reports suggesting the group had suspended a number of managers in its R&D division.

- Incalculable costs -

With the carmaker facing the possibility of having to recall as many as 2.8 million vehicles in Germany alone, the direct and indirect costs of the affair are still incalculable.

VW has already said it will set aside 6.5 billion euros in provisions in the third quarter. But analysts at DZ Bank suggested it could be 1.0-3.0 billion euros more.

On top of that sum, VW also faces onerous regulatory fines, including up to $18 billion in the United States. And the fallout on customer purchases cannot yet be estimated.

Investors appear to fear that more bad news is still to come.

After losing 34 percent of their value or around 25 billion euros last week, VW shares were again the biggest losers on the Frankfurt stock exchange Monday, where they showed a loss of as much as 9.3 percent in intraday trade. They ended the day 7.5 percent lower.

Timeline of events in VW pollution cheating scandal
Frankfurt (AFP) Sept 28, 2015 - German auto giant Volkswagen is sinking deeper into the biggest scandal in its history following revelations it fitted millions of diesel cars with software designed to dupe pollution tests.

Here is a timeline of key events in the scandal which exploded 10 days ago.

2007: Suspect software first installed

According to the mass-circulation daily Bild, auto parts supplier Bosch made the suspect software available to Volkswagen in 2007, "purely for purposes of internal testing only."

The automaker begins to install the technology in its vehicles, despite a warning from Bosch that it was illegal to do so in cars destined for sale to the general public.

It was also in 2007 that Martin Winterkorn was appointed Volkswagen's chief executive.

2011: Alarms raised

According to the Sunday newspaper Frankfurter Allgemeine Sonntagszeitung, a VW employee sounded the alarm bell that the software might "infringe" legislation, but that did not prevent the carmaker from continuing to install it.

2014: Researchers test vehicles

Researchers at the University of West Virginia are commissioned by the International Council on Clean Transportation to subject Volkswagen vehicles to road tests. The findings suggest the cars spew up to 40 times as much nitrogen oxide than is legally permissible.

The researchers inform the US authorities, who in turn ask Volkswagen for a response. The carmaker argues that the anomalies between the tests and the road performance are due to "different technical problems" and unexpected conditions of use.

By the end of 2014, Volkswagen of the United States recalls a number of models for "software updates" and tells the authorities it has remedied the problem.

May 2015: New tests

The US authorities, including the California Air Resources Board, undertake a new series of tests, the results of which are still unsatisfactory. CARB informs Volkswagen and the US Environmental Protection Agency (EPA). A series of "technical meetings" between the carmaker and the authorities ensues.

July 2015: Environmentalist questions

In response to a question from the environmentalist Green party, the German government says it is aware of the existence of technologies that can skew the results of emission tests, but says it has no information about whether such devices are actually in use.

September 3: VW confession

Unable to provide any convincing answers, Volkswagen admits to CARB and EPA that it deliberately installed the software in its cars.

September 18: Authorities go public

Just as VW shows off its new "eco-friendly" models at the IAA auto show in Frankfurt, CARB and EPA go public with their accusations that Volkswagen installed clean-air cheating device software to evade US limits on nitrogen oxide and other pollutants.

According to the US authorities, about 482,000 cars in the United States are equipped with the so-called "defeat device" software that covertly turns off pollution controls when the car is being driven and turns on when it detects that the vehicle is being tested for emissions.

September 20: Winterkorn 'sorry'

VW issues a statement late on Sunday in which Winterkorn, 68, says he is "deeply sorry" for having "broken the trust of our customers and the public." He vows that VW will "cooperate fully" with the authorities and "will do everything to re-establish" that trust.

September 21: Stock sinks

VW shares go into a tailspin when markets opened, plunging more than 17 percent and sending around 15 billion euros up in smoke. The German government orders immediate "specific and extensive" tests on the vehicles concerned. South Korea follows suit, announcing emission tests on three different Volkswagen car models in mid-October.

September 22: 11 million vehicles

VW shares shed a further 20 percent and drag down other car stocks. The carmaker confesses that 11 million vehicles worldwide are equipped with the cheating software and Winterkorn offers his "deepest apologies".

September 23: Winterkorn resigns

Under fire, Winterkorn resigns, accepting responsibility as CEO for the affair, but insisting that he personally was "not aware of wrongdoing."

Public prosecutors in Germany launch a preliminary inquiry after receiving a number of legal complaints from private individuals against VW.

Rating agency Fitch threatens to downgrade the carmaker's credit worthiness.

September 24: EU urges probes

Pressure continues to build on VW as the EU urges its 28 member states to investigate whether vehicles comply with European pollutions rules. Private law firms are also lining up to take on the German company, with a class action suit already filed by a Seattle law firm.

September 25: New CEO, US ban

Volkswagen names Matthias Mueller, the 62-year-old head of VW's luxury sportscar brand Porsche, as Winterkorn's successor. The new boss promises to do everything to shed light on the affair. In the US, authorities ban sales of Volkswagen diesel cars until 2016, while Switzerland suspends sales of new Volkswagen models.

September 28: Criminal probe

German prosecutors open a criminal investigation against ex-CEO Winterkorn, saying the probe will focus on the allegation of fraud by selling vehicles with manipulated emission values. "The aim of the investigation is to clarify the chain of responsibility," prosecutors say.


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