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New challenges surface for VW, including a possible new defeat device...

RoadOverreader comments 21 Share this story Last week was touchy for Volkswagen Group and its profitable Audi brand. Yesterday, the German magazine Bild Am Sontag reported that the California Air Resources Board (CARB) had discovered that unspecified Audi vehicle models were running illegal software to bring carbon dioxide (CO2) emissions within legal limit under laboratory conditions.

The software, according to Bild Am Sontag, also killed CO2 emissions controls while the Audis were driven under normal conditions, much like the defeat device scandal involving VW, Audi, and Porsche vehicles that was exposed last September. This illegal software was apparently found in both gas and diesel Audi models produced up until May 2016. Neither Audi nor CARB has confirmed the reports to any outlet, including Ars Technica. The Wall Street Journal, however, spoke to anonymous sources that seemed to confirm the German magazine’s claims. Reports surfaced last November that some 800,000 Volkswagen vehicles in Europe may have been running with falsified CO2 data.

Those were said to include VW, Audi, Seat, and Skoda vehicles, most of which were diesels.

This new information concerns Audis in the US, and it includes gas vehicles as well.

According to the WSJ, “CARB technicians conducting lab tests on Audi’s vehicles made them react as if on a road by turning the steering wheel... When the cars deviated from lab conditions, their CO2 emissions rose dramatically.” WSJ is uncertain how seriously CARB is taking the discovery.
In a separate report yesterday, Reuters reported that CARB had made its discovery earlier this year. In a statement to Ars, CARB spokesperson David Clegern wrote that the agency can’t comment on an ongoing investigation. He added that CARB has been testing vehicles from all manufacturers “to determine if there are undisclosed auxiliary emissions control devices (AECDs) or defeat devices that impact those emissions.” Clegern continued: The new screening procedures are in addition to the standard certification emissions test cycles.
If illegal AECDs or defeat devices are discovered, CARB will aggressively pursue the investigation and require the manufacturer to correct the violations at its own expense.
In addition, the manufacturer may be subject to penalties, as provided by law. The CARB-Volkswagen news was preceded this weekend by news that VW Group’s former chief financial officer (CFO) Hans Dieter Pötsch is under investigation.

According to the New York Times, he is under investigation for allegedly violating securities laws by “failing to notify shareholders quickly enough of the financial risks of the diesel emissions cheating scandal.” Pötsch became a chairman on the company’s supervisory board just weeks after VW Group was accused of installing defeat devices on diesel vehicles to help them pass nitrogen oxide (NOx) emissions tests in markets around the world. Pötsch is one of a few top executives—including VW Group CEO Martin Winterkorn and Herbert Diess, a member of the company’s management board—who are openly being investigated.

Earlier this year, a former Volkswagen engineer, James Liang, became the first and thus far only VW employee to be found guilty of wrongdoing in the scandal. Even the known parts of VW Group’s ongoing scandal are still mired in negotiations and bureaucracy. Last week, US District Judge Charles Breyer declared that VW Group had until Nov. 30 to propose a plan to get 80,000 3.0L diesel vehicles off the road—whether that means fixing the cars or buying them back. Judge Breyer expressed confidence that VW Group would return to the court with “what I hope will be very good news.” Those 80,000 cars are separate from the roughly 475,000 2.0L diesel vehicles that also used illegal software to manipulate emissions.
VW Group settled that issue for nearly $15 billion—including $10.033 billion to buy the affected vehicles back and more than $4.7 billion in fines and mitigation payments.

US VW probe finds criminal wrongdoing, regulators work to settle

Erik BVolkswagen defeat device scandal Massachusetts, New York, Maryland accuse Volkswagen execs in fresh lawsuits Air regulator rejects Volkswagen’s latest plan to fix 3.0L diesels GM says it misstated fuel economy, Opel denies emissions cheating allegations Norway’s gigantic wealth fund will sue Volkswagen over dieselgate After losing $6.2B in 2015, Volkswagen pledges $18B to address emissions issue View more storiesreader comments 13 Share this story On Monday, the Wall Street Journal wrote that investigators from the US Department of Justice have evidence to support criminal charges against Volkswagen Group for installing illegal software on 600,000 diesel vehicles sold in the US between 2009 and 2015. The illegal software circumvented emissions regulations. Those same sources for the WSJ say that prosecutors are torn between seeking a guilty plea from the company or negotiating a deferred prosecution agreement. The deferred prosecution agreement would dismiss charges against VW as long as the automaker signs an agreement to stick to certain settlement terms. Reuters confirmed the situation with two sources. Reuters reported earlier this summer that a consent decree between the US and VW Group could involve “an independent monitor overseeing the German automaker's conduct and significant yet-to-be determined fines for emissions violations.” WSJ sources say that Volkswagen is expected to receive some leniency for coming to a $15 billion civil settlement with prosecutors in June. In the settlement, VW offers to buy back affected diesel vehicles from owners at their worth before the emissions cheating scandal was made public. Still, those sources say additional fines for criminal charges could exceed the record $1.2 billion that Toyota was fined in 2014. Toyota was fined for failing to disclose acceleration issues with their cars to US authorities. If charges are brought against Volkswagen, those charges could involve misleading regulators and consumers. According to the WSJ’s sources, prosecutors have not decided which specific charges to bring against the company. The WSJ says that the DOJ could still bring charges against individual employees of VW Group as well, although many of them live in Germany and would need to be extradited. In July, attorneys general in Maryland, New York, and Massachusetts filed civil lawsuits naming two dozen VW Group employees as participants in the scheme to install illegal software on Volkswagen, Audi, and Porsche brand cars. The WSJ reports that a separate federal criminal probe involves “multiple individuals” from VW Group. According to Reuters’ sources, Volkswagen is completing its own internal investigation. That investigation, as well as the various civil suits launched against the company, has “slowed progress on reaching a settlement of the criminal investigation.” VW is also facing potential fines and legal costs pertaining to 85,000 3.0L diesel vehicles which were not covered in the $15 billion June civil settlement.

Report: In 2006, a VW executive suggested adding illegal software to...

Thomas HawkAccording to a report from The New York Times, slides from a 2006 presentation suggest that a "top technology executive" within Volkswagen Group detailed how the company could circumvent US auto emissions regulations by including illegal software on the German automaker’s diesel cars. That illegal software showed up first in diesel Volkswagen and Audi models from 2009 and later and then in a handful of diesel Audi and Porsche SUV models.

The US Environmental Protection Agency cited VW Group for its transgression in September, leading to a huge scandal for the automaker. Last week, VW Group said it would buy back nearly 500,000 affected 2.0L engine vehicles and set aside $18 billion to deal with the buyback, the legal costs, and regulatory fines. The Times said the 2006 presentation was discovered during the course of investigations into the company’s actions, and two anonymous sources confirmed to the paper that they had seen the slides in question.
Volkswagen has maintained that its top management was unaware of the problem for years and then misunderstood the severity of the problem when it was brought to its attention in 2014. The 2006 PowerPoint allegedly notes that engineers at VW Group’s research and development branch quickly found out that the emissions control system in its latest diesels would “wear out too quickly if it were calibrated to meet American pollution standards,” the Times reported.
In Europe, auto emissions are not as stringently regulated. The Times continued: A technology expert at Volkswagen offered a solution in the PowerPoint presentation. Just a few pages long, the 2006 presentation included a graph that explained the process for testing the amount of pollution spewing from a car.
In a laboratory, regulators would try to replicate a variety of conditions on the road. The pattern of those tests, the presentation said, was entirely predictable.

And a piece of code embedded in the software that controlled the engine could recognize that pattern, activating equipment to reduce emissions just for testing purposes. As the years went by, VW Group allegedly altered the software to improve the cars’ ability to detect when a lab test was being conducted versus when the car was being driven on the open road. "During regulators’ tests, the engine software would turn up the pollution controls. When it was on the road, equipment designed to neutralize harmful nitrogen oxides would [be] turned down," the Times wrote. The EPA requires that automakers wanting to sell new cars in the US must provide the agency with documentation on the components of the vehicle, as well as the results of self-administered emissions and mileage tests.

Third-party and real-world testing was rare until recently, when research groups became able to buy or make equipment to do their own tests more easily.

This relaxed attitude toward emissions testing is common throughout the world—and Volkswagen was even caught illegally manipulating its cars for the US market once before, in 1973.

At the time, the company was fined $120,000 and did not have to admit wrongdoing. VW Group’s recent cheating was only noticed in 2014 due to research conducted by West Virginia University. The Times reported that even after US regulators began inquiring about discrepancies between test results and real-world results, company executives brushed off suggestions on ways to bring VW Group vehicles into compliance with US standards, according to more anonymous sources.

The company’s management group allegedly "rebuffed lower-ranking employees who submitted technical proposals for upgrading the emissions controls, according to the two people who attended meetings where the proposals were discussed,” the Times wrote. "More effective emissions equipment would have made Volkswagen vehicles hundreds of dollars more expensive, without providing a benefit that customers could perceive,” the paper continued. "In the United States, even a modestly higher sticker price would have made it more difficult for Volkswagen to compete with rivals like Toyota and Honda.” According to a memo the Times has viewed, a US law firm hired by VW Group estimated that the company would be on the hook for a fine in the range of $100 million, according to historical data on previous auto manufacturer fines. With that information, executives failed to take the matter as seriously as they should have. “[Former VW Group CEO Martin] Winterkorn and other top managers were used to deferential treatment by government officials in Germany, where it is one of the largest employers,” the Times wrote. In another memo, VW Group’s executive liaison with US regulators said he had only been given half an hour between the time that the EPA said it would publicly announce VW Group’s violations and the time of the announcement.

The executive claimed he believed the company would have four months to privately discuss the matter with regulators.

Kingpin behind large chunk of world’s malware exploits led lavish life

Russian prosecutors confirm arrests connected to BlackHole Exploit kit.