Dieselgate: Bringing a Face to Scandal Impacting Volkswagen Owners

VW Diesel Engine

A Volkswagen manager pleaded guilty to conspiracy and violating the Clean Air Act and could get seven years in prison. A Volkswagen engineer who agreed to testify against the Volkswagen manager was sentenced to three years in prison for the same two felonies. Both men met their fate in federal court in Detroit.

In Germany, two Volkswagen executives were arrested for their roles in Dieselgate, the iconic automobile company’s illicit emissions coverup.

Dieselgate involves a lot of bad actors, but Oliver Schmidt, James Liang, Wolfgang Hatz and Giovanni Pamio have brought a face to the scandal that has tainted more than a half-million vehicles in the United States and those who drive them. The scandal unfolded in 2015, when the Environmental Protection Agency caught Volkswagen installing a defeat device in its 2.0- and 3.0-liter engines. A defeat device is a piece of software that enables a vehicle to pass an emissions test even though, when it is on the road, it will release more pollutants than allowed under the law. Worldwide, Dieselgate has been linked to over 11 million Audis, Porsches and Volkswagens.

Schmidt, fingered as a central figure in the scandal, worked in research and development in a plant in Auburn Hills, Mich. His role as a liaison to the EPA was downright deceptive, according to a Detroit Free Press article that appeared in USA Today titled “VW executive pleads guilty in emissions scandal.”

“For several years, Schmidt shepherded Volkswagen’s vehicles through a diesel emission certification process and said the company’s vehicles met regulatory standards,” the article states. “In his plea, Schmidt admitted he knew in the summer of 2015 that devices had been installed on VW diesel vehicles to cheat emissions tests and said that he was told by Volkswagen management not to disclose that information with a regulator during a meeting he was told to set up.”

The German national faced a third felony – wire fraud – which was dropped during the plea. The man who agreed to testify against Schmidt also was identified as a key player in duping the government out of its efforts to reduce greenhouse gasses.

“This crime is a very serious and troubling crime against our economic system,” U.S. District Judge Sean Cox said in another Detroit Free Press article that appeared in USA Today titled “VW engineer gets 40 months in prison for role in diesel scandal.”

Cox added that while Liang was “arguably a brilliant engineer,” the defendant also was “arguably too loyal to Volkswagen” in the “massive and stunning fraud.”

Both Schmidt and Liang also will pay fines. Schmidt’s could be as much as $400,000. Liang’s is $200,000.

Hatz worked as Volkswagen’s powertrain-development director and is the highest-ranking executive to be taken into custody for Dieselgate. His arrest followed that of Pamio’s, who worked as Volkswagen’s head of thermodynamics for Audi engines.

“Pamio, with whom Hatz was close and worked with at Fiat before they both joined Audi, was suddenly thrust into the Dieselgate spotlight after a wrongful dismissal lawsuit by Audi’s former head of diesel engine development, Ulrich Weiss,” explains a Forbes article titled “Former Volkswagen Engine Boss Taken Into Custody Over Dieselgate.” “Weiss, who was suspended over Dieselgate and then sacked, gave testimony at the preliminary hearings for the ongoing lawsuit that implicated Pamio and was the catalyst for Hatz to be taken into custody.”

More bad actors might emerge two years after the scandal surfaced. Their premeditated and greedy business practices not only have tainted a company known for quality European cars and SUVs that are fun to drive but also have resulted in harmful amounts of nitrogen oxide being released into the atmosphere.

“By duping the regulators, Volkswagen turned nearly half a million American drivers into unwitting accomplices in an unprecedented assault on our environment,” NBC News reported Deputy Attorney General Sally Yates as saying at a news conference.

Volkswagen’s $14.7-million settlement agreement now totals $15 million after the company took a $3-million hit in the third quarter of 2017 to keep up with its buy-back program.

“The latest added cost could erase more than half of Volkswagen’s projected $5.3 billion earnings for the third quarter, according to estimates by three financial analysts compiled by Bloomberg,” according to a USA Today article titled “VW takes nearly $3B extra charge for fixing scandal-tainted U.S. diesel vehicles.”

In a bit of good news, the buy-back program finally has been extended to military members overseas. Military AutoSource, a Defense Department vendor, has negotiated a trade-in value with Volkswagen for each vehicle plus a 20-percent fee and a restitution payment.

“The agreement between MAS and VW may ease concerns for servicemembers and military-affiliated civilians stationed in Europe,” Stars and Stripes reports in an article titled “Volkswagen offers overseas servicemembers buyback after scandal.”