2017-08-22 11:50:02
Audi Engineer Implicates Superiors in Diesel Case, Lawyer Says

FRANKFURT — A cloud of suspicion hanging over Volkswagen thickened on Monday after a lawyer for a jailed former engineer said his client implicated top managers of the German carmaker’s Audi luxury brand in a continuing diesel cheating scandal.

Statements and evidence provided to German investigators by Zaccheo Giovanni Pamio, former head of thermodynamics in Audi’s engine development department, suggest that knowledge of emissions fraud reached higher in the ranks of management than Volkswagen has admitted. No members of the company’s management board have been charged, although investigations are continuing.

The steady drip of revelations shows how difficult it has been for Volkswagen to move beyond the emissions scandal, nearly two years after it first became public. On the contrary, the scandal has only widened.

Diesel has become a national political cause célèbre in Germany after accusations that Volkswagen, Daimler and BMW colluded for years to cut corners on emissions equipment, contributing to unhealthy pollution levels in major cities. In its monthly report published on Monday, the German Finance Ministry said that the diesel crisis had become “a new risk for the German economy.”

Volkswagen, which has admitted to outfitting its diesels in the United States with software to evade emissions rules, has paid out tens of billions of dollars in fines and settlements over the deception, and several executives have been arrested. Now, its operations in Europe are coming under greater scrutiny, as prosecutors attempt to pressure lower-level employees, like Mr. Pamio, to testify against their superiors.

“The net is drawing closer on the present and former management board,” said Christian Strenger, a former chairman of the International Corporate Governance Network, an advocacy group. “The evidence is revealing more and more they were part of the whole affair more or less from the beginning.”

Mr. Pamio has told prosecutors in Munich that top Audi managers were aware as early as 2006 that vehicles made by the division could not meet American and European emissions standards, according to Walter Lechner, a defense attorney for the former Audi engineer. The cars could not carry an adequate supply of a urea solution known as AdBlue used to neutralize harmful tailpipe fumes.

Like its parent company, Audi solved the problem of faulty pollution equipment by deploying software that fooled regulators. The cars were programmed to deliver low emissions during conditions that matched those used during compliance tests. At other times, Volkswagen has admitted in court, the cars polluted far more than allowed.

Prosecutors have interviewed Mr. Pamio 10 times, Mr. Lechner said, and will speak to him again later this week. Mr. Pamio has also provided investigators with emails and other documents to substantiate his verbal testimony, according to the defense attorney. In addition, Mr. Pamio has spoken to United States investigators, Mr. Lechner said.

Spokesmen for Audi and Volkswagen said on Monday that they could not comment on a continuing investigation.

Mr. Pamio has been held in a Munich jail since July at the request of American investigators, who are expected to file a formal request for extradition in the coming days. Mr. Pamio is at least the third former Volkswagen employee to cooperate with investigators, a number that is likely to rise.

His decision to testify, and allow his lawyer to publicly confirm aspects of the statements he made to prosecutors, shows that lower-ranking employees at Volkswagen do not want to bear the consequences for actions they believe they took with knowledge of their superiors. Mr. Pamio’s testimony was first reported by the Munich newspaper Süddeutsche Zeitung in collaboration with the regional broadcasters NDR and WDR.

Mr. Lechner, the defense attorney, declined to say which managers Mr. Pamio implicated. The testimony covers a period beginning in 2006, when Martin Winterkorn was chief executive of Audi and chairman of the unit’s management board. A year later, he became chief executive of Volkswagen, and was replaced by Rupert Stadler, who had previously been the Audi board member responsible for finance.

Mr. Winterkorn resigned in September 2015 after the emissions cheating scandal came to light, but Mr. Stadler has remained in his post as chief executive of Audi. Mr. Stadler, who is also a member of the Volkswagen management board, is not officially considered a suspect, said Karin Jung, a spokeswoman for the Munich state attorney’s office.

But Ms. Jung said investigators were continuing to evaluate evidence, including documents collected during a raid in March that included Mr. Stadler’s office.

A lawyer for Mr. Winterkorn did not reply to a request for comment.

Current members of Volkswagen’s leadership also have ties to Audi during the time period covered by Mr. Pamio’s testimony. Matthias Müller, who replaced Mr. Winterkorn as chief executive of Volkswagen, was head of product management at Audi until 2007, when he assumed the same position at the Volkswagen brand. Mr. Müller has said he had no knowledge of the illegal software.

German prosecutors are investigating about 40 people. The vast majority are German citizens who according to German law cannot be extradited to the United States. As a citizen of Italy living in Germany, Mr. Pamio does not enjoy the same protections.

Mr. Lechner said Mr. Pamio was suffering in jail and being treated unfairly by authorities simply because he is Italian.

“He is the only one who has cooperated fully,” the lawyer said.