Volkswagen Is Accused of Emissions Fraud as New York and Massachusetts Sue, Naming Names

Volkswagen Is Accused of Emissions Fraud as New York and Massachusetts Sue, Naming Names
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The New York complaint connects Volkswagen’s chief executive, Matthias Müller, to the scandal for the first time. Credit Alexander Koerner/Getty Images

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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