Investigation spreads into VW pollution cheating

German auto giant Volkswagen faced fast-spreading worldwide investigations and a potentially huge financial hit Tuesday as a scandal mounted over diesel cars it programmed to secretly thwart US pollution tests.

France requested a Europe-wide probe into the revelations, South Korea summoned Volkswagen officials, and the US Justice Department reportedly launched a criminal investigation.

Volkswagen, the world's largest automaker by sales, said it had halted all diesel vehicle sales in the United States during a US probe which could lead to fines of more than $18 billion (16 billion euros).

The carmaker has already been punished on the financial markets. Its shares plummeted 18.19 percent to 133 euros ($148.80) on Monday, wiping out more than 15 billion euros in market value.

France's finance minister on Tuesday called for a "Europe-wide" probe, telling French radio that it seemed "necessary" to check cars manufactured by other European carmakers in order to reassure the public.

"This is not a minor subject, it's not about speed or the quality of leather," Michel Sapin told Europe 1 radio station.

"What we are dealing with is making sure people avoid being poisoned by pollution," said the minister.

South Korean officials summoned VW representatives for explanations on Wednesday. "We will start conducting tests no later than next month," said a senior official at the environment ministry.
In addition to the environmental probe already underway, the US Department of Justice has launched a criminal investigation, US officials told Bloomberg news agency. The Justice Department and Volkswagen declined to comment on the reports.

According to the US authorities, VW has admitted that it had equipped about 482,000 cars in the US with sophisticated software that covertly turns off pollution controls when the car is being driven and turns them on only when it detects that the vehicle is undergoing an emissions test.

With the so-called "defeat device" deactivated, the car can spew pollutant gases into the air, including nitrogen oxide in amounts as much as 40 percent higher than emissions standards, said the US Environmental Protection Agency, which announced the allegations Friday along with California authorities.

- Blow to reputation -

"Using a defeat device in cars to evade clean air standards is illegal, and a threat to public health," said Cynthia Giles, enforcement officer at the EPA.

In Germany, the government has already launched an investigation into whether Volkswagen or other carmakers are doing anything similar in Germany or Europe.
Transport Minister Alexander Dobrindt told the Bild daily that he had asked Germany's Federal Motor Transport Authority "to immediately have specific and extensive tests conducted on all Volkswagen diesel models by independent experts."

Beyond the potential fines and lawsuits, the company faces a potentially crippling blow to its reputation.

The vehicles affected are four-cylinder VW and Audi diesel cars in the US built since 2008.

The EPA said that the agency had not issued a formal recall for the VW vehicles but expects to "compel" the company to issue a recall to reduce the emissions impacts of those vehicles.

"Depending on the complexity of the repair and the lead time needed to obtain the necessary components, it could take up to one year to identify corrective actions, develop a recall plan, and issue recall notices," the US agency said.

The EPA also said Monday that it will screen for defeat devices in other manufacturers' diesel vehicles currently on the road, though declined to identify the automakers whose vehicles will be tested.

VW chief executive Martin Winterkorn issued an apology Sunday, vowing that the group would cooperate with authorities and ordering an external investigation of its own into the matter.

- Deeply sorry -

"The board of management takes these findings very seriously. I personally am deeply sorry that we have broken the trust of our customers and the public. We will cooperate fully with the responsible agencies, with transparency and urgency, to clearly, openly and completely establish all of the facts of this case," Winterkorn said.
"We at Volkswagen will do everything that must be done in order to re-establish the trust that so many people have placed in us, and we will do everything necessary in order to reverse the damage this has caused. This matter has first priority for me, personally, and for our entire board of management," Winterkorn said.

Christian Stadler of Warwick Business School said there was "no question that this is a big problem for Volkswagen and could lead to CEO Winterkorn losing his job after all."

Winterkorn, 68, has been chief executive since 2007, but clashed with other leadership earlier this year.

Sigmar Gabriel, Germany's vice-chancellor and economy minister, voiced confidence that VW would clear up the matter quickly and thoroughly.

And he insisted the reputation of "Made in Germany" technology would not be tarnished.