Volkswagen sued over emissions 'cover-up' that was 'orchestrated and approved at the highest levels'

Photo: Alexander Koerner/Getty Images.

The New York, Maryland, and Massachusetts Attorneys General have filed a damning suit against Volkswagen, Porsche, and Audi, claiming a massive “cover-up” of the group’s emissions scandal that was “orchestrated and approved at the highest levels of the company.”

The explosive suit alleges that:

  • Volkswagen has been installing “defeat devices” that cheated emissions tests since the mid-2000s;
  • The group “made a knowing decision to violate the law” and “researched the laws in this country and previous enforcement cases before embarking on this course;”
  • There was a “cover up” by the company of the software that cheated emissions tests once regulators discovered the faulty emissions readings;
  • The “cover up” was “orchestrated and approved at the highest levels of the company, up to and including the former CEO, Martin Winterkorn;”
  • New CEO Matthias Müller allegedly knew about the “defeat devices” as early as 2006;
  • Volkswagen “allegedly destroyed incriminating documents” after hearing of the investigation of the Attorneys General.

Volkswagen was not immediately available for comment when Business Insider contacted the group. The Financial Times quotes VW as saying the allegations are “essentially not new” and the company is addressing them. It adds that it is continuing to “work co-operatively” with the authorities and: “It is regrettable that some states have decided to sue for environmental claims now, notwithstanding their prior support of this ongoing federal-state collaborative process.”

Volkswagen was last year busted for installing “defeat devices” in its cars that cheated diesel emissions tests in the US for seven years. Volkswagen is facing huge fines, its reputation is in tatters, and Martin Winterkorn was forced to step down as CEO.

The suit from the Attorneys General claims that the “defeat devices” were cooked up by VW to avoid the complex task of re-engineering cars that were failing tests. The suit is being brought on environmental grounds, claiming the company knowingly polluted the environment.

The case against the company claims that VW “tried to cover up the problem through sham recalls that they knew would not meet the required standards” after the Environmental Protection Agency told the car maker it had discovered the emission problem.

VW “repeatedly failed to disclose to regulators the true reason — the defeat devices — for the discrepancies and only confessed to the defeat devices when they knew the regulators had them pinned to the facts,” the lawsuit claims.

The statement on the action adds: “The lawsuits allege this cover-up was orchestrated and approved at the highest levels of the company, up to and including the former CEO, Martin Winterkorn.”

The Financial Times also reports that the case claims new CEO Matthias Müller was alerted to the defeat devices during his time as a top engineer at the company in 2006.

Not only were these devices illegal, the suit claims that the group “made a knowing decision to violate the law” and “researched the laws in this country and previous enforcement cases before embarking on this course.”

“They knew what they were going to do was illegal, and if caught they would face government enforcement and sanctions,” a statement on the case says. “They went ahead and did it anyway.”

The New York Attorney General’s office says it found “no evidence that a single Volkswagen, Audi or Porsche employee came forward to blow the whistle” at any point.

New York Attorney General Eric T. Schneiderman says in the suit against Volkswagen, which also owns Porsche and Audi, that the scandal “reveal[s] a culture of deeply-rooted corporate arrogance, combined with a conscious disregard for the rule of law and the protection of public health and the environment.”

His office says in a statement on the suit that: “Volkswagen’s response to the scandal shows that the company has not reformed its corporate behaviour,” adding:

“When the investigation was getting under way in late 2015, numerous employees, tipped off by a senior in-house lawyer in Germany, allegedly destroyed incriminating documents. Just last month, the Volkswagen Supervisory Board recommended a package of bonuses for the Management Board that presided over the cover-up totaling over $70 million, including generous severance pay to Mr. Winterkorn himself.”

The lawsuit follows a 9-month investigation by a multistate coalition of over 40 states and other jurisdictions, led by New York, Massachusetts, and four other states. The complaints allege, in detail, a cover-up that Volkswagen and Audi allegedly managed for nearly a year-and-a-half.

New York Attorney General Eric T. Schneiderman adds in the statement on his website: “These suits should serve as a siren in every corporate board room, that if any company engages in this type of calculated and systematic illegality, we will bring the full force of the law — and seek the stiffest possible sanctions — to protect our citizens.”

NOW WATCH: 3 Wall Street legends share one investment they find attractive right now

Business Insider Emails & Alerts

Site highlights each day to your inbox.

Follow Business Insider Australia on Facebook, Twitter, LinkedIn, and Instagram.