Volkswagen: the investigation widens

The Volkswagen investigation has widened after two developments this week.

On 2 November 2015, the United States Environmental Protection Agency (EPA) issued a second notice of violation to Volkswagen, alleging that the company developed and installed a defeat device in certain VW, Audi and Porsche diesel vehicles equipped with 3.0 liter engines that increases emissions of nitrogen oxide (NOx) up to nine times EPA’s standard. 

Volkswagen responded by saying no software has been installed in the particular engine to “alter emissions characteristics in a forbidden manner”. The company added that it would fully cooperate with the EPA to clarify the matter.

The following day, Volkswagen put out a press release revealing that internal investigations at Volkswagen identified irregularities in CO2 levels in around 800,000 vehicles. Volkswagen estimated the economic risks at two billion dollars, and reiterated their commitment to cooperate with the responsible authorities.

A consideration of the potential involvement of UK authorities was made in the blog, Volkswagen, dated 25 September. There is nothing unusual in further developments emerging from an investigation by the EPA, but it is interesting the company chose to release the findings of an internal investigation at this early stage.

Ironically, this approach mirrors that made in a recent speech by the Serious Fraud Office:

  •  “We expect early engagement. We don’t want to hear from you every five minutes, and we accept you need enough time and space to have an initial look at an allegation that comes to your attention. But nor do we want the first time we hear from you to be at the end of a major internal investigation, months if not years after the conduct in question has surfaced, and in particular after multiple witnesses have been interviewed and re-interviewed extensively.”

It will be interesting to see whether, at the conclusion of this course of investigation, the relevant US authorities make any reference to the apparently cooperative approach of Volkswagen.

To read more about the issue of legal professional privilege in internal investigations, see the Practical Law practice notes, Legal professional privilege in internal investigations and Waiving privilege in an internal investigation.

Practical Law David Bacon

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