Clarence Ditlow, executive director for the Center for Auto Safety said,”The damage to Volkswagen is going to last for years. This was so clearly a deliberate act by executives at Volkswagen that there needs to be criminal penalties.”
Investigations are pouring in from across the globe in recent days as the fallout intensifies from the September 18th disclosure by the Environmental Protection Agency (EPA) that Volkswagen used specialized software to cheat emissions testing. As expected, CEO Martin Winterthorn resigned on Wednesday and on Friday, the company’s board appointed the former head of Volkswagen’s Porsche division Matthias Mueller as its new chief. Mueller will have plenty of work to do as the number of investigations launched this week into the scandal may be greater than the amount of vehicles the company sold. Attorneys General from 27 states, including California, Texas, and Illinois have launched a joint investigation in the U.S., along with a separate federal-level Justice Department probe. That investigation is what should be most alarming to Volkswagen, as a recent policy change instructs U.S. attorneys to focus on charging individuals who enable fraud, as opposed to more financially-oriented settlements with large corporations accused of wrongdoing. Clarence Ditlow, executive director for the Center for Auto Safety said,”The damage to Volkswagen is going to last for years. This was so clearly a deliberate act by executives at Volkswagen that there needs to be criminal penalties.”
Current and former executives for the beleaguered German automaker could be facing a global uphill battle to save their rap sheets, even if the U.S. agrees to play ball with the company. Although the original announcement a week ago that nearly 500,000 of the affected “clean diesel” vehicles were sold in the U.S., brought initial shockwaves, Tuesday’s disclosure that over 11 million vehicles worldwide contain the same type of diesel engine system as the U.S. models that has turned the scandal global. This includes 10 million Volkswagen diesels in Europe. It is unknown as of yet if the company installed the “defeater devices” in vehicles not sold in the U.S. The European Commission has encouraged the 28 EU member nations “to look into the implications for vehicles sold in Europe and ensure that E.U. pollutant emission standards are scrupulously respected.” French environmental minister Ségolène Royal has already said that officials in her country will conduct 100 random emissions tests. Norway announced on Friday that its economic crimes division will be investigating the scandal. Italy has also launched an investigation and authorities in Germany, where the company is of vital economic importance, has also sounded calls for a widened investigation. South Korea has also recalled diesel Volkswagens, and announced on Friday it too will launch a probe into the matter.
The one saving grace for Volkswagen is that it may not be alone in defrauding regulators over its emissions ratings. Although the company has taken the biggest hit by far, losing 31 percent of its value in the week since the first disclosure, or $24 billion, other European automakers saw their stocks plummet as well in recent days over fears of collateral damage from the scandal. Stock prices for companies like BMW, and French carmakers Renault and Peugeot plummeted early in the week. Exane BNP Paribas analyst Stuart Pearson doubts that Volkswagen is the only company trying to cheat emissions regulators saying, “The artificial gaming of emissions tests threatens to become the car industry’s Libor moment.” Still, Jonathan German of the International Council on Clean Transportation, the group that helped uncover the scandal noted that identifying fraud among the other automakers will be difficult, saying “It’s the sort of thing you just don’t go around accusing companies of doing unless you’re absolutely sure.” Additionally, this kind of emissions cheating is not unprecedented, although its scope is. Hyundai, Cadillac, Ford, and Honda have all been accused of circumventing emissions regulations in the past.
Sources:
Bloomberg Business – Margaret Cronin Fisk
CBS News – Kris Van Cleave and Ben Tracy
New York Times – Jack Ewing and Melissa Eddy
The Atlantic – Krishnadev Calamur
Wall Street Journal – William Boston
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