Dieselgate: Audi employee arrested in Germany

GERMANY has made its first arrest related to Volkswagen Group’s diesel emissions cheating, almost two years after the scandal began to unfold.

Two German-language newspapers, Bild and Spiegel name the arrested as Giovanni Pamio, the same former Audi manager against whom the United States laid criminal charges last Thursday for his role in the emissions conspiracy.

While the accused was arrested in Germany “on suspicion of fraud and false advertising,” US authorities accuse Mr Pamio of “conspiracy to defraud the US, wire fraud, and violation of the Clean Air Act”.

“After Pamio and co-conspirators realised that it was impossible to calibrate a diesel engine that would meet NOx (nitrogen oxides) emissions standards within the design constraints imposed by other departments at the company, Pamio directed Audi employees to design and implement software functions to cheat the standard US emissions tests,” alleges the US.

“Pamio and co-conspirators deliberately failed to disclose the software functions, and they knowingly misrepresented that the vehicles complied with US NOx emissions standards.”

Mr Pamio was head of thermodynamics in Audi’s diesel engine development department who, according to the US complaint, led an engineering team responsible for designing emissions control systems that would meet emissions standards for diesel vehicles sold in the US between 2006 and late 2015.

A spokesperson for the Munich prosecutors’ office told Reuters that German authorities had arrested an Audi employee as a result of their own investigations, rather than responding to a request from the US.

Reuters reports that the suspect faced court last Tuesday and is now in custody. The spokesperson also told Reuters no members of the Audi board were being personally investigated.

The 24-page criminal complaint document filed against Mr Pamio by Special Agent Lynn Rademacher-Gault of the US Environmental Protection Agency describes two emissions cheating methods called “dosing strategy” and “warm-up function”.

Dosing strategy allegedly increased the amount of AdBlue exhaust after-treatment used when the engine was under test conditions, switching to a lower amount under normal driving to reduce AdBlue consumption but with the effect of increasing NOx emissions.

Warm-up function is alleged to have increased exhaust gas recirculation through the catalytic converter under test conditions, “further optimising AdBlue use and allowing the vehicle to stay within US NOx emission limits”. Again, when normal driving was detected this method was wound back into “customer mode” under which exhaust gas recirculation was reduced and NOx emissions increased.

An anonymous employee of Audi’s diesel engine development department is cited in the Pamio case as cooperating in the investigation in return for impunity from prosecution in the US.

Evidence from this witness, along with documents obtained by investigators, suggest Mr Pamio lied or omitted facts during meetings and correspondence with US regulators during the process of obtaining and maintaining approval for Audi and VW diesel vehicles to be sold in the US.

In addition, the case against Mr Pamio suggests that in 2008 he dismissed warnings and advice from colleagues that the dosing strategy constituted “cycle beating,” “indefensible,” “a plain Defeat Device,” and “not certifiable”.

Also alleged is that in 2013 Mr Pamio received an email from a manager in Audi’s certifications department “about approaching US regulators to discuss the dosing strategy in Audi diesel vehicles,” but that Mr Pamio responded that it would be “too risky”.

He is also alleged to have participated in a presentation to a senior Audi executive and a member of the company’s brand management board describing the dosing strategy and its “problematic characteristics”. In the complaint document an Audi engineer who sent an email with the presentation attached advised recipients to delete both the email and attachment.

The first VW employee to face the US justice system was engineer James Liang, who was indicted in June last year, pleading guilty on September 9 to one count of conspiracy to defraud the United States, to commit wire fraud, and to violate the Clean Air Act.

In return for his guilty plea and cooperation in the investigation, Mr Liang remains free on bail awaiting a reduced sentence of up to five years in jail and a $US250,000 ($A329,000) fine.

Former VW environmental and engineering general manager Oliver Schmidt remains behind bars in the US, having been arrested on January 7 in Miami during a Christmas holiday. He pled not guilty in February and has been refused bail, reportedly facing a life sentence if convicted.

Five other VW executives wanted by US authorities remain in Germany, with which it has no extradition treaty, but Mr Pamio could reportedly face extradition as he is an Italian citizen. GoAuto understands he was suspended from his role at Audi last September.

The indicted executives comprise former head of development Heinz-Jakob Neusser, former head of engine development Jens Hadler, former head of engine development after-treatment Richard Dorenkamp, former quality management and product safety supervisor Bernd Gottweis and Jurgen Peter from the company’s quality management and product safety department and was a liaison with US regulatory agencies from March to July 2015.

In January a VW executive named only as Yoon in court documents was jailed in South Korea for his role in the dieselgate scandal, while criminal proceedings were also filed against Audi Volkswagen Korea managing director Johannes Thammer.

During the same month, Volkswagen AG pled guilty to US charges of cheating diesel emissions tests and obstructing investigations into the scandal. It agreed to pay $US4.3 billion ($A5.65b) in criminal and civil penalties.