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 Michael Horn, head of Volkswagen Americas, testified before a House
of Representatives oversight and investigations panel about the
emissions scandal that has chopped more than a third of the
company's market value and sent tremors through the global auto
industry.
Volkswagen's use of defeat devices, software that evaded U.S. tests
for emissions harmful to human health, was not a corporate decision,
but something a few employees engineered, Horn said under oath.
"This was a couple of software engineers who put this in for
whatever reason," Horn said about the software code inserted into
diesel cars since 2009. Volkswagen used different defeat devices in
Europe and the United States, Horn said, as emissions standards are
different in the two regions.
"Some people have made the wrong decisions in order to get away with
something," Horn said when asked by lawmakers if Volkswagen cheated
with defeat devices because it was cheaper than using special
injection systems to cut emissions.
Lawmakers slammed an Environmental Protection Agency official who
testified after Horn for not catching Volkswagen. Representative
Michael Burgess, a Texas Republican, questioned the size of EPA's
annual budget, noting that the cheating was uncovered by a West
Virginia University study that had a budget of less than $70,000.
"I'm not going to blame our budget for the fact that we missed this
cheating," replied the EPA's Christopher Grundler, who said his
transportation and air quality office has an annual budget of
roughly $100 million. "I do think we do a very good job of setting
priorities."
Burgess replied: "With all due respect, just looking at the
situation, I think the American people ought to ask that we fire you
and hire West Virginia University to do our work."
Volkswagen is expected next week to provide U.S. and California
regulators with a preliminary attempt at a software fix for the
defeat devices it installed in 2012-2014 Passats, the U.S.
Environmental Protection Agency said on Thursday.
SUED IN TEXAS, RAIDED IN GERMANY
The German automaker has suspended 10 senior managers, including
three top engineers, as part of its internal investigation. The
scandal, the biggest business crisis in Volkswagen's 78-year
history, has also forced the ouster of long-time CEO Martin
Winterkorn.
German prosecutors raided Volkswagen's headquarters and other
offices earlier on Thursday, as part of their investigation into
whether the company also cheated tests in Europe.
Volkswagen said it was supporting the investigation and had handed
over a "comprehensive" range of documents.
The internal inquiry has found employees began to install defeat
devices after realizing a costly new engine would fail U.S.
emissions standards, according to sources. Company investigators
have found no evidence against the engineers.
Also on Thursday, the state of Texas sued Volkswagen over the
marketing of supposedly clean diesel vehicles, alleging the company
violated a state law prohibiting deceptive trade practices.
Representative Chris Collins, a Republican from New York, said at
the House hearing he categorically rejected Horn's statement that
using defeat devices was not a corporate decision.
"Either your entire organization is incompetent when it comes to
trying to come up with intellectual property, and I don't believe
that for a second, or they are complicit at the highest levels in a
massive cover-up that continues today," Collins said.
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Volkswagen, even after hearing in the spring of 2014 about an
independent study that showed emissions irregularities in two of its
diesel cars, told U.S. air regulators for about a year that the
higher emissions data was the result of technical problems with the
tests.
Horn said the company told regulators only on Sept. 3 that it was
using defeat devices and that before then he had no understanding of
what they were.
Horn, sitting alone before the committee with folded hands and a
furrowed brow, apologized to lawmakers for Volkswagen's using defeat
devices, and pledged to cooperate with the committee. But he offered
little new, saying the company's external investigation remains at a
preliminary stage.
THE FIX
Owners of 2009 to 2015 Volkswagen diesel cars have more questions
than answers about their vehicles and many have joined lawsuits
against the company. Horn said fixing the vehicles will take years
and require approval from regulators. A small number of cars are
expected to need only a software fix.
Most of the cars would require more extensive changes including
possible installation of urea tanks that neutralize harmful
emissions and particulates.
Volkswagen is working to obtain conditional approval from EPA and
California regulators to begin software fixes in January on some of
the 482,000 cars that had defeat devices. Another group of the cars
will require fixes that would begin no earlier than mid-2016. But
there was no date for fixing the 325,000 oldest "Generation One"
cars that need the most repair.
The EPA's Grundler told lawmakers he expects Volkswagen to provide
options for fixing the cars as early as next week.
Representative Frank Pallone, a New Jersey Democrat, said Horn's
statements did not give him "much confidence that we're going to see
these vehicles get fixed."
Pallone pressed EPA air enforcement director Phillip Brooks on
whether individuals at Volkswagen or the company itself could face
criminal charges. "It would be unfair for me to say much more about
what the end result might be," Brooks said.
"But it’s a possibility?” Pallone asked.
“Certainly,” Brooks answered.
(Additional reporting by Andreas Cremer in Berlin, Barbara Lewis in
Brussels and David Ingram in New York; Editing by Matthew Lewis)
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