As VW Scandal Unfolds, Ripple Effect Extends Through Entire Auto Industry

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As VW Scandal Unfolds, Ripple Effect Extends Through Entire Auto Industry

Calls for criminal prosecution in US increase while international regulators begin 'to ponder whether such deception is widespread'

"The Volkswagen emissions scandal grows worse by the hour," watchdog group Public Citizen said on Tuesday. (Photo: Dennis Elzinga/flickr/cc)

Volkswagen's unfolding diesel emissions-fixing scandal, which is now known to affect 11 million cars worldwide and is causing the company's stocks to plummet, could turn out to be just the tip of the iceberg, as the U.S. Environmental Protection Agency (EPA) and officials from Germany, France, the U.K., and beyond widen their probe to include other car makers.

"We need to ask the question, is this happening in other countries and is this happening at other manufacturers?" declared John German of the International Council for Clean Transportation (ICCT), a European-based NGO that is among those raising the alarm.

According to Reuters on Monday, the EPA and California officials said they would test diesel vehicles from other manufacturers for similar violations. In addition to Volkswagen, Reuters noted, automakers including General Motors and Fiat Chrysler sell diesel cars and SUVs in the United States.

Meanwhile, the Wall Street Journal reported Tuesday that regulators around Europe are beginning "to ponder whether such deception is widespread."

The WSJ wrote:

The [French] state of Lower Saxony, a major Volkswagen shareholder with 20% of the car maker’s voting stock, said the emissions allegations raised doubts about tailpipe data published by all car makers.

The French government also called for a broader probe, suggesting a European-wide examination of the auto industry. “We need to do it at the European level,” French Finance Minister Michel Sapin said Tuesday.

[...] In Germany, Olaf Lies, Lower Saxony’s economy minister and a member of the Volkswagen’s supervisory board, called for a wider probe and said investigations into the scandal would have consequences for any executives found guilty of deliberate manipulation.

“I am convince that everyone is going to become intensely interested in knowing whether the emissions values that have been measured are the real emissions levels,” he said. “This question will not only affect Volkswagen, but the entire public debate and will certainly play a role at other companies.”

"The artificial gaming of emissions tests threatens to become the car industry’s LIBOR moment," Stuart Pearson, an analyst at Exane BNP Paribas, told the Financial Times, referring to the massive financial scam uncovered among London banks in 2012.

Adding to the speculation, the Guardian reported Tuesday:

Greg Archer, a former government adviser and head of clean vehicles at the respected Transport & Environment thinktank, said: “I am not surprised. There has been a lot of anecdotal evidence about carmakers using these defeat devices. All credit to the EPA for investigating and finding the truth.”

Archer, the former managing director of the UK’s Low Carbon Vehicle Partnership and non-executive director for the government’s Renewable Fuels Agency, said the scandal could spread into petrol cars and CO2 levels. “It is probably not limited to diesel and not limited to emissions,” he added.

Meanwhile, the UK's Telegraph declared on Tuesday: "Every major car manufacturer is selling diesel cars that fail to meet EU air pollution limits, according to a report released this month."

The Telegraph continued:

While Volkswagen has made the headlines by admitting to rigging pollution tests with software in VW and Audi diesels, new figures reveal that nine out of 10 diesels breach emissions regulations.

Analysis from transport group Transport and Environment (T&E) claims that the worst culprits were Audi, Opel, BMW and Volkswagen.

An Audi was the worst car identified in the survey. It emitted levels of nitrous oxide that were 22 times the allowed EU limit.

There is no shortage of U.S. stakeholders looking into the corporate malfeasance. In addition to the EPA and California's Air Resources Board, the U.S. Congress is also investigating the debacle. New York and other state attorneys general are forming a group to probe the scandal, a spokesman for New York Attorney General Eric Schneiderman said.

And the U.S. Justice Department (DOJ)—which recently restated its intent to hold white collar criminals accountable—has reportedly taken the preliminary steps to open a criminal investigation into VW.

In a statement on Tuesday, consumer watchdog group Public Citizen called on the DOJ to follow through on its promises.

"Justice demands a sharp break from the kid-glove, coddling treatment that the U.S. Department of Justice has shown to corporate criminals over the past decade," said Public Citizen president Robert Weissman. "Assuming the allegations are true, this is a premeditated, intentional act designed to circumvent the law, with callous disregard for the fact that the vehicles were poisoning people and the planet in the process."

"Volkswagen must be made to plead guilty for its crimes with no deferred prosecution agreement, regardless of whatever cooperation it now provides," he continued. "Individuals inside Volkswagen must be prosecuted and should be sent to jail."

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