Dieselgate: Ex-Audi exec charged

Another former high-ranking Volkswagen Group manager has been charged in the US over Dieselgate, but this time the Justice Department might get their man.

And, more tellingly, the US believes it now knows the details and the people who gave the orders for Dieselgate’s Ground Zero, in Neckarsulm, Germany.

The US Department of Justice (DOJ) has Oliver Schmidt in jail awaiting trial over Dieselgate after a dramatic end to a misguided holiday, but now they’ve snared the man they insist was behind the emissions cheat at Audi.

But the latest man charged, Giovanni Pamio, is Italian, not German.

Germany is unlikely to extradite the six other Volkswagen Group senior managers charged over Dieselgate, but they have no such qualms about extraditing foreign citizens to the US.

The DOJ has charged Pamio with conspiring to defraud the US and customers over the cheating software developed at Audi and sold as “Clean Diesel”, plus wire fraud and making a false statement of compliance with the Clean Air Act.

Already fired last year from his role as head of Thermodynamics in Audi’s Diesel Engine Development Department, Pamio was arrested by Munich police earlier this week, where prosecutors also accuse him of fraud and false advertising.

Pamio, 60, is alleged to have been at the centre of approving the software for production and for assuring authorities that it complied with all type-approval regulations, even though it only cleaned up the tailpipe NOx emissions in a laboratory.

"Pamio and co-conspirators deliberately failed to disclose the software functions, and they knowingly misrepresented that the vehicles complied with emissions standards,” the DOJ claimed.

The eighth former Volkswagen or Audi executive charged over Dieselgate, Pamio worked in diesel engine development at Audi’s technical centre at Neckarsulm, Germany. Of the others, the highest-ranking person charged is Heinz-Jakob Neusser, Volkswagen’s former board member in charge of development.

The DOJ alleged that after calculating the US NOx limits couldn’t be achieved with the design and engineering programs Audi was using, Pamio instructed Audi developers to cheat the test instead.

"Pamio led a team of engineers responsible for designing emissions control systems to meet emissions standards, including for nitrogen oxides ("NOx"), for diesel vehicles in the United States,” the charge sheet reads.

“Pamio and his co-conspirators, however, realized they could not calibrate a diesel engine that would meet NOx emissions standards within the design constraints imposed by other departments at the company.

“In order to nevertheless market and sell vehicles with the Audi diesel engine in the United States, Pamio and his co-conspirators directed Audi employees to design and implement software functions to cheat the standard U.S. emissions tests, and then deliberately failed to disclose the software functions, and misrepresented, and caused to be misrepresented, to the regulators and U.S. customers, that the vehicles complied with U.S. NOx emissions standards, when they knew the vehicles did not."

The wording of the charge delivers the first clear timeline of how the DOJ believes the US$24 billion Dieselgate scandal happened, and who was making the decisions at Ground Zero.

“On or about January 23, 2008, Audi engineers who helped design the dosing strategy sent a presentation to senior Audi managers, including Pamio, to warn that the dosing strategy constituted ‘cycle beating’, which was ‘highly problematic in the US’ because, among other thing, it was an undisclosed AECD and possibly a defeat device, and could be discovered by regulators,” the charge sheet read.

“On or about July, 4, 2008, Pamio received advanced warning from an Audi employee responsible for certification that managers in the certification department had concluded the dosing strategy was ‘indefensible’ because ‘it is a plain defeat device and is not certifiable’.

“On or around March 23, 2009, to obtain certification, Pamio caused VW employees to send CARB (the California Air Review Board) a letter affirmatively misrepresenting that there were no defeat devices in the MY09 vehicles.”

While prosecutors in the US, the German state of Braunschweig and Bavaria and the Volkswagen Group’s own Jones Day law firm have all scoured the Group’s companies for evidence, the latest charges didn’t stem from their legwork.

Instead, they came after Audi suspended Ulrich Weiss, its former head of diesel engine development, who then sued Audi (a case which remains pending). In the hearings, Weiss implicated Pamio, who was then fired along with three other diesel engineers (including Weiss).

Audi has been raided several times by German state prosecutors, sometimes acting on behalf of US investigators, including in March on the morning of Audi’s annual results conference.

The DOJ charges identify the position of Pamio, who came to Audi from Fiat, was the German carmaker’s head of V6 diesel development for the US market. He was deeply involved in development of common-rail fuel-injection systems for diesel engines.

After trawling through hundreds of thousands of emails and diary entries, DOJ investigators allege Pamio was one of the handful of Volkswagen managers who discussed future diesel emissions standards with a CARB panel in October 2006.

He was also one of the Volkswagen officials in a follow-up meeting in March, 2007 where the car maker told CARB its emissions-cleaning technology would work in “normal vehicle operation”, while simultaneously developing the Dieselgate cheat.

Volkswagen is still paying for its September, 2015 admission that 11 million of its turbodiesel cars had a defeat device, with a subsequent extension of that scandal coming via Audi’s 3.0-litre V6 turbodiesels.

Another Volkswagen Group manager, James Liang, is free on bond awaiting sentencing after he pleaded guilty late last year to conspiracy to defraud the US.