FBI Busts Volkswagen Executive in Emissions Cheating Scandal

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In the wake of new revelations following Volkswagen’s emissions cheating scandal, the FBI arrested one of its top executives on multiple charges of conspiracy to defraud the federal government. Two people familiar with the matter broke the news on Sunday.

Federal investigators took Oliver Schmidt into custody on Saturday from his residence in Florida. Sources said he would appear in court on Monday in a Detroit court. Schmidt headed the company’s regulatory compliance office in the U.S. between 2014 and 2015.

The Scandal

Details about the emission scandal surfaced in early 2014 after a detailed study from West Virginia University. At the time, the executive persuaded regulators at the California Air Resources Board that the extra emissions during tests were triggered by technical problems rather than by a rigged system. Officials said much of the data Schmidt’s office submitted was fabricated.

Schmidt was still in charge of the office at the time the car maker admitted in Sept 2015 it equipped some of its vehicles with a piece of software called a “defeat device.” The modifying software detected when a car was undergoing an emission test and changed parameters to pass the test.

VW took the unfortunate decision in a bid to sell its diesel cars in the U.S., which has some of the world’s tougher emission standards. However, the Environmental Protection Agency (EPA) found about 482,000 units in the U.S. and 11 million vehicles worldwide had the defeat device. Of these, about 8 million landed on the European market.

The EPA also found the 3-liter diesel engines in some Audis, Porsches and VW models contained the illegal software. The car maker dismissed accusations, which would have affected an extra 10,000 cars.

Two months ago, Volkswagen acknowledged there were “irregularities” in laboratory tests measuring CO2 emissions levels as well. About 800,000 vehicles in Europe had the CO2 defeating device. A month later, the company said a separate investigation lowered the number to 36,000 cars per year.

Schmidt’s Involvement

Schmidt told a British parliamentary committee in January that the devices were not breaking European laws. Schmidt’s attorneys have yet to reply to a request for comment sent late Sunday. The U.S. Department of Justice and an FBI official declined to comment.

A spokesperson for the German car maker revealed the company would cooperate with DOJ officials. However, she declined to comment on an ongoing investigation. Separate lawsuits filed against Schmidt in Massachusetts and New York claim he played an important part in keeping U.S. regulators in the dark about the emissions cheating.

In late 2014, the defendant allegedly presented false technical documentation to justify high emissions levels during tests. A year later, he admitted a defeat device enabled VW cars to pass U.S. emissions tests.

The automaker acknowledged it installed the software on 11 million diesel vehicles across the world. The ‘device’ detected test conditions and switched on a  pollution control system to lower emissions levels even if that took a toll on engine performance. The pollution control system, however, worked only partially on public roads allowing the cars to release nitrogen oxide at 40 times higher levels than those legal in the U.S.

It is not the first time, U.S. arrests someone at Volkswagen over the emissions cheating scandal. Last fall, a California engineer pleaded guilty to charges of conspiracy to defraud the U.S. Experts noted that with Schmidt’s apprehension, the probe moves to executive ranks.
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