More Charges, Fines, From Emissions Scandals

The latest round of fines and charges related to myriad diesel-emissions cheating scandals ensnare VW CEO, Daimler and an FCA engineer.

Greg Kable

September 24, 2019

3 Min Read
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Three automakers caught up in latest diesel-related fines, charges.

Prosecutors in Germany and the U.S. have issued charges or levied fines against companies or individuals in connection with three different actions related to past emissions cheating.

In a 636-page indictment, German prosecutors Tuesday brought criminal charges of stock market manipulation against Volkswagen Group CEO Herbert Diess. Diess is accused of intentionally failing to inform stock market investors in a timely fashion about the financial impact of possible lawsuits against emission manipulation measures engineered into various VW diesel models.

Together with Diess, both VW supervisory board chairman Hans Dieter Poetsch and former Volkswagen Group chairman Martin Winterkorn also are among the accused.

Diess will remain in his post and continue to defend himself with all legal means, his lawyers say. Diess joined Volkswagen in July 2015 as chairman of the VW brand. His attorneys claim it was not foreseeable that Diess could be held responsible for diesel issues and the financial consequences relevant to the capital market.

Legal proceedings already are underway in connection to VW’s admission in 2015 to developing and using illegal engine control software to alter the outcome of diesel emission tests.

The new indictment brought against Diess, Poetsch and Winterkorn is part of a separate legal proceeding to hold VW officials accountable for allegedly delaying disclosure of the scandal and its possible financial implications to investors.

Winterkorn resigned his post as VW CEO shortly after the scandal was made public. He has since claimed he was not informed of diesel emission manipulation measures any earlier than VW officially had admitted.

However, documents from a meeting attended by Diess, Poetsch and Winterkorn on July 27, 2015, allegedly show the three discussed when to inform U.S. authorities about the diesel emission manipulation measures well ahead of an official announcement made by VW on September 22, 2015.

VW’s share price lost up to 37 percent of its value in the week the diesel emission scandal went public.

Daimler Hit with $958 Million Fine

In another diesel-related action, German prosecutors fined Mercedes-Benz parent company Daimler €870 million ($958 million) for “negligent violation” in a case involving the sale of various Mercedes-Benz models suspected of featuring measures leading to the manipulation of diesel exhaust emissions.

In a statement Tuesday, the Stuttgart public prosecutor said the German automaker sold about 684,000 cars that did not comply with EU mandated regulations on NOx (nitrogen oxide) emissions.

In a separate statement, Daimler said it had waived any right to appeal the finding. It also moved to quell any questions about the financial impact of the fine, saying it would not have any significant influence on its third-quarter earnings.

The fine is the latest to be handed down by the Stuttgart public prosecutor in relation to diesel emission manipulation measures. Porsche was handed a €535 million ($589 million) fine in May, while Bosch was fined €90 million ($99 million).

The Stuttgart public prosecutor’s office said the Daimler fine has no impact on a separate investigation into individuals suspected of garnering knowledge of software used to manipulate emissions in diesel-powered Mercedes-Benz models.

FCA Exec Charged

Federal prosecutors in Detroit have charged a Fiat Chrysler Automobiles engineer in connection with a scheme to rig diesel engines in its light-duty Ram pickups and Jeep Grand Cherokees to cheat on emissions tests.

Emanuele Palma is charged with violating the federal Clean Air Act among other charges in his role as a diesel engine lead engineer and senior manager at FCA.

The federal indictment alleges Palma and others at FCA intentionally misled “regulators, customers, and the public” by misrepresenting “the design, calibration, and function of the emissions control systems” used on diesel engines installed in 104,000 vehicles. Reports say additional indictments are expected.

Palma “purposefully calibrated the emissions control system to produce lower NOX emissions under conditions when the subject vehicles would be undergoing testing,” the government alleges.

FCA has paid an estimated $800 in million fines and other costs to compensate Ram and Jeep owners affected by the emissions problem.

– with Bob Gritzinger in Southfield, MI

 

 

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