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October 9, 2015

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German prosecutors raid VW’s offices, seize files

GERMAN prosecutors yesterday raided Volkswagen’s headquarters and other offices as part of their investigation into the carmaker’s rigging of diesel emissions tests.

Prosecutors from Braunschweig, close to the German company’s hometown of Wolfsburg, said they were targeting documents and data storage devices that might help with their inquiries.

Volkswagen said it was supporting the investigation and had handed over a “comprehensive” range of documents.

Almost three weeks after it confessed to rigging United States emissions tests, Europe’s largest carmaker is under huge pressure to identify those responsible, fix affected vehicles and clarify how and where the cheating happened.

The biggest business crisis in Volkswagen’s 78-year history has wiped more than a third off its share price, forced out its long-time chief executive, prompted investigations across the world and rocked both the car industry and German establishment.

Later yesterday, the company’s top US executive would tell a panel of US lawmakers he knew the carmaker might be breaking US emissions rules as long as 18 months before it admitted cheating diesel tests to regulators.

The admission by Michael Horn, in a written testimony to a congressional oversight panel a day ahead of the hearing, is likely to raise questions about why the company did not act more quickly to tackle its wrongdoing.

“In the spring of 2014 ... I was told that there was a possible emissions non-compliance that could be remedied,” Horn, president and CEO of Volkswagen Group of America, said in his statement published on a US House of Representatives website.

It was not until last month that Volkswagen told US regulators it had installed so-called “defeat devices” in some diesel engines to mask their true level of toxic emissions.

Volkswagen has come under fire on both sides of the Atlantic for its handling of the crisis, with lawmakers, investors and customers saying it has been too slow to release information.

Germany’s Sueddeutsche Zeitung newspaper yesterday cited a company spokesman as saying Volkswagen’s manipulation software was switched on in Europe.

The carmaker has previously said the software could be installed on up to 11 million vehicles, mostly in Europe, but that for the majority of them it “does not have any effect.”

In a statement yesterday it said it was still investigating whether or to what extent the software interfered illegally with vehicles.

“We are working intensely on technical solutions,” a spokesman said.

Volkswagen has suspended more than 10 senior managers, including three top engineers, as part of an internal investigation. It has also hired US law firm Jones Day to conduct an external inquiry.

UBS analysts have estimated that Volkswagen could face a bill of about 35 billion euros (US$39.4 billion) to refit vehicles, pay regulatory fines and settle lawsuits, though they said also that this is more than factored into the stock price after its plunge.




 

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