Police raid Volkswagen headquarters, US chief admits knew of problem in 2014

Michael Horn testifies on the Volkswagen emissions cheating scandal.
Michael Horn testifies on the Volkswagen emissions cheating scandal.AFP

BERLIN (AFP) - German police swooped on Volkswagen's headquarters on Thursday, carrying away files and hard disks in their investigation into a massive pollution cheating scandal engulfing the auto giant.

Private apartments were also raided in Volkswagen's hometown of Wolfsburg and other cities, prosecutors told AFP, as police sought to secure documents and digital data that could point to those responsible for the deception of global proportions.

The raids came as Volkswagen's US chief faced a grilling before Congress, where he told a committee that he knew more than a year ago that the group's cars possibly breached pollution rules.

But Michael Horn said he did not know until "a couple (of) days" before Sept 3 that "defeat devices" had been installed deliberately in the vehicles to help them cheat pollution tests.

The German auto giant sank into the deepest crisis of its history after revealing that it equipped 11 million of its diesel vehicles worldwide with software that switches the engine to a low-emissions mode during tests.

The defeat devices then turn off pollution controls when the vehicle is on the road, allowing it to spew out harmful levels of toxic gases.

The shocking revelations have wiped more than 40 per cent off Volkswagen's market capitalisation, but the direct and indirect costs are still incalculable as the company risks fines in several countries and possible damages from customers' lawsuits.

Horn told the congressional committee that although he found out that the emissions of VW diesel cars did not meet US regulations in early 2014, "I was not then told nor did I have any reason to suspect or to believe that our vehicles included such a device."

"At that point of time, I had no understanding what a defeat device was. And I had no indication whatsoever that a defeat device could have been in our cars."

Admitting that the company had "broken the trust of our customers, dealerships, and employees, as well as the public and regulators", Horn apologised, saying: "We at Volkswagen take full responsibility for our actions and we are working with all relevant authorities in a cooperative way."

Underlining the uphill task to winning back confidence, Congressman Peter Welch said: "VW is the Lance Armstrong of the auto industry" - a reference to the US cyclist who had to be stripped of seven consecutive Tour de France titles after he was caught doping.

PRIVATE APARTMENTS RAIDED

In Germany, prosecutors from the state of Lower Saxony said raids were carried out to "secure documents and data carriers that, in view of possible offences, can provide information about the exact conduct of company employees and their identities in the manipulation of exhaust emissions of diesel vehicles".

A spokeswoman for the prosecutors, Julia Meyer, told AFP that "several people are targeted in the investigation".

Sites raided "include private apartments, and it is important to guarantee the privacy of these people", she said.

Volkswagen confirmed that it had handed over documents to prosecutors, adding that the company would provide the necessary support to the probe.

A spokesman said it was "also in the interest of Volkswagen" for there to be "a prompt and thorough explanation" of the scandal.

Volkswagen's new chief Matthias Mueller has said four employees have been suspended over the deception, adding however that he did not believe that top management could have been aware of the scam.

He said in an interview published Wednesday by the Frankfurter Allgemeine Zeitung that the development of an engine is "a complex process" and that these were tasks in which "a director is not directly involved".

Horn too said Thursday it was a "couple of software engineers who put (the devices) in".

'SYSTEMATIC CHEATING'

Claims emerged in German media reports on Thursday that Volkswagen had not only deliberately fitted the cars sold in the US market with the defeat devices, but had also intentionally sought to cheat tests in Europe by doing so with vehicles sold on the continent.

"In Europe too, Volkswagen effectively cheated on emissions in a systematic manner," newspaper Sueddeutsche Zeitung claimed, citing its own research in collaboration with public broadcasters NDR and WDR.

It added that "without the cheating software, the affected cars would not have been authorised under the Euro 5 emissions regulation".

A VW spokesman said whether the defeat devices were activated in Europe was still the subject of investigations. He added that it remained "legally unclear if the device was forbidden under European rules".

Volkswagen, which submitted its plans and timetable to bring vehicles into compliance to German authorities on Wednesday, plans to begin recalling affected vehicles from January. But it admitted that it would only complete the refitting by the end of 2016.

The group has set aside €6.5 billion (S$10.3 billion) in the third quarter over the affair, but that would only likely cover repairs of affected vehicles.

In the United States alone, Volkswagen faces up to US$18 billion (S$25 billion) in fines from the Environmental Protection Agency, plus potential payouts from class action lawsuits and penalties from other regulators.