The New York and Massachusetts attorneys general on Tuesday directly challenged Volkswagen’s defense over its emissions deception, calling the decision to thwart pollution tests
an orchestrated fraud that lasted more than a decade, involved dozens
of engineers and managers and reached deep into the company’s boardroom.
The
accusations, leveled in state lawsuits, contradict Volkswagen’s
portrayal of the deception, representing a new threat to the carmaker’s
finances, reputation and management team.
Volkswagen, which admitted late last year to equipping 11 million vehicles
worldwide with software to cheat emissions tests, has maintained that
the deception was limited to a small group of people. The company has
said top management was not aware of the cheating software, known as a
defeat device.
But
the New York civil complaint, drawing on internal Volkswagen documents,
emails and witness statements, depicts a corporate culture that allowed
a “willful and systematic scheme of cheating,” according to an advance
copy of the suit. The evidence paints the most detailed picture yet
about how the deception unfolded and who was responsible.
For
the first time, the New York complaint connects Volkswagen’s chief
executive, Matthias Müller, to the scandal. Mr. Müller, according to the
suit, was aware of a 2006 decision to not equip Audi vehicles with
equipment needed to meet American clean-air standards. To save money,
the company opted instead to install defeat devices in the cars. The
suit stops short of accusing Mr. Müller of having specific knowledge of
the device.
At
the time, Mr. Müller was head of project management at Audi,
Volkswagen’s luxury car division. He became chief executive of
Volkswagen in September, replacing Martin Winterkorn, who resigned days
after the Environmental Protection Agency accused the company of the
diesel deception in September.
“The
allegations against Volkswagen, Audi and Porsche reveal a culture of
deeply rooted corporate arrogance, combined with a conscious disregard
for the rule of law or the protection of public health and the
environment,” Eric T. Schneiderman, the New York attorney general, said in a statement, according to an advance copy of the release.
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Maura
Healey, the Massachusetts attorney general, filed a suit Tuesday that
makes similar accusations. The suits claim that the company made false
statements to regulators and broke laws requiring cars to have approved
pollution control systems
Mr. Müller and Mr. Winterkorn have previously denied any involvement in the wrongdoing.
The potential blowback for Volkswagen could be costly.
The company last month agreed to pay nearly $15 billion, a record, to settle claims
in the United States by Volkswagen owners and regulators. But the
settlement did not resolve what penalties might be imposed on
Volkswagen, leaving room for additional suits like those filed by the
two attorneys general.
The
New York and Massachusetts suit do not specify what penalties the
states are seeking, but they could easily be in the hundreds of millions
of dollars. If other states follow as expected, Volkswagen could face
billions of dollars in extra costs.
The
company is also dealing with criminal investigations and shareholder
lawsuits around the world. The United States Justice Department, in
announcing the earlier settlement, said it was still pursuing a criminal
investigation.
The
complaints break the silence that prevailed in both Germany and the
United States about the genesis of the scandal and who was involved.
The
New York complaint claims that more than two dozen Volkswagen engineers
and managers were involved in the deception, including Wolfgang Hatz, the
former head of engine and transmission development at Volkswagen and
Audi; Ulrich Hackenberg, former head of development for Audi; and
Heinz-Jakob Neusser, former head of development for the Volkswagen
brand. While several executives have been identified by the news media,
German prosecutors, because of the country’s strict privacy laws, have
only named one suspect, Mr. Winterkorn.
The
suit, filed in New York State Supreme Court in Albany, also criticized
Volkswagen’s supervisory board for awarding 63 million euros (about $70
million) in salary and bonuses to Mr. Müller and other members of the
management board last year. “Recent actions,” the complaint said,
“demonstrate that the company’s culture that incentivizes cheating and
denies accountability comes from the very top and, even now, remains
unchecked.”
The
deception, the complaint described, was an “iterative process,”
underscoring a systemic scheme. As the New York complaint laid out,
there were six separate defeat devices in more than a decade.
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