Dieselgate: VW tolerated rule breakers

A chain of errors in decision making led to the Volkswagen Group’s costly #Dieselgate scandal, the head of its Supervisory Board has admitted.

Hans Dieter Pötsch (pictured) yesterday admitted the preliminary investigation report into the diesel emissions-cheating scandal was not caused by a one-off mistake or fraud by one engineer.

Instead, Pötsch said the scandal-hit car-maker’s crisis was driven by a 2005 decision to push its diesel passenger cars into the United States, even before its engineers had the technology to pass its strict NOx emissions laws.

He said people inside the Volkswagen Group, which has set aside nearly €7.2 billion euros to repair the damage to its reputation and to fix 11 million affected cars, began cheating when they realised they could not pass the limits, but continued cheating even after they had the technology to be completely lawful.

“It proves not to have been a one-time error, but rather a chain of errors that were allowed to happen,” Pötsch said at a press conference in Wolfsburg today, insisting Volkswagen would be relentless in finding and prosecuting those at the heart of the scandal.

He said that the internal investigations, which were reviewed by US law firm Jones Day and the German Department of Transport (KBA), found no fraudulent behaviour surrounding the CO2 certification, but had significant findings on the Dieselgate nitrogen oxide (NOx) emissions scandal.

The investigation has so far used 450 internal and external investigators and has pored through 102 terabytes of data from 1500 data storage devices taken from 380 employees. Volkswagen will reveal the next tranche of the investigation’s findings in Wolfsburg on April 21, 2016.

Pötsch confirmed a group audit determined the cheating scandal arose because of three factors, including misconduct and shortcomings of individual employees and weaknesses in some processes.

“There was a mindset in some areas of the company that tolerated breaches of rules. This factor was the most difficult for us to accept.

“It is clear that, in the past, deficiencies in processes have favoured misconduct on the part of individuals,” Pötsch admitted.

“This is true, for example, for test and certification processes affecting our engine control devices, which were not suited to preventing use of the software in question.

“Group Audit has suggested specific remedies to correct this. We are concentrating on structuring these processes more transparently and systematically.

“For example, in the future, software for engine control devices will be developed more strictly in accordance with the four-eyes principle.

“Deficiencies were also found in reporting and monitoring systems. The main problem there was that responsibilities were not sufficiently clear.”

So far the scandal has lead to the suspension of nine Volkswagen Group senior executives, the most high profile being Porsche development boss Wolfgang Hatz, Volkswagen Group development head Heinz-Jakob Neusser and Audi’s development boss, Dr Ulrich Hackenberg, who retired last week.

Sources insisted that at least two of those three are safe from further action, which Pötsch seemed to reiterate by saying the preliminary investigation found no evidence that any Supervisory Board or Management Board-level executives were involved.

Other suspended executives were closer to the heart of the scandal and Pötsch said the investigation’s conclusions must be able to hold up in criminal court.

“We will be relentless in seeking to establish who was responsible. Everything is on the table. Nothing will be swept under the carpet.

“We have to understand how this came about. It’s the only way we can stop it from happening again.”

Volkswagen admitted to the US Environmental Protection Agency and the California Air Review Board three months ago that it had been cheating on NOx emissions in the US with a 'defeat' device, a piece of software code that only switched on its full emissions controls when it was tested in a laboratory.

Real-world tests by a West Virginia University more than 18 months ago found several Volkswagen cars emitting up to 35 times more NOx on the road than in the laboratory.

The scandal has since spread worldwide with the Audi, Seat, Skoda and Volkswagen brands. The Volkswagen Group has engineered and approved a fix for its European cars for a rollout beginning next month, but it is still working on fixing the cars for the tougher US tests (31 milligrams of NOx emissions per kilometre compared to 80).

He explained that the 2005 decision to launch a large-scale diesel assault on the US market was the catalyst for Dieselgate.

“Initially, it proved impossible to have the EA 189 engine meet by legal means the stricter nitrogen oxide requirements in the United States within the required timeframe and budget.

“This led to the incorporation of software that adjusted nitrogen oxide emission levels according to whether vehicles were on the road or being tested.

“Later, when an effective technical process was available to reduce NOx emissions, it was not employed to the full extent possible. On the contrary, the software in question allowed the exhaust gas treatment additive 'AdBlue' to be injected in variable amounts such that the NOx values were particularly low when vehicles were in the test bay, but significantly higher when vehicles were on the road.”

Pötsch would not address leaked information that the cars cheated to save the company around €300 a car, which could either be pocketed or put into other areas of the car to gain a commercial advantage over its rivals.

"No business transaction justifies overstepping legal and ethical bounds," Pötsch insisted.

"I here and now guarantee that we will pursue our thorough investigation to its conclusion. I vouch for this personally, as does the entire Supervisory Board of Volkswagen AG."

The changes being made include a realignment of the at-fault processes inside the Volkswagen Group, along with personnel changes where necessary.

The company also unveiled plans for next year’s blueprint for the future, dubbed Strategy 2025, in which "yes-men" were out and curious people were in.

“We don’t need yes-men, but managers and engineers who make good arguments in support of their convictions and projects, who think and act like entrepeneurs,” Volkswagen Management Board Chairman and CEO Matthias Müller insisted.

“I am calling for people who are curious, independent, and pioneering. People who follow their instincts and are not merely guided by the possible consequences of impending failure.

“In short: the future at Volkswagen belongs to the bold. We need a little more Silicon Valley, coupled with the competence from Wolfsburg, Ingolstadt, Stuttgart and the other Group locations."

Follow the Dieselgate saga on motoring.com.au