Volkswagen defends Müller

Morally troubled car maker Volkswagen has leapt to the defence of its CEO, Matthias Müller, after three United States attorneys General filed fresh Dieselgate lawsuits this week.

The three states, New York, Massachusetts and Maryland, all specifically named Müller in their complaints for the first time since the scandal broke last September.

Müller was the CEO of sports-car brand Porsche when the scandal hit and, viewed as a clean pair of hands with no connection to the development or implementation of the emissions-cheating software, replaced then-boss Dr Martin Winterkorn late last year.

But Müller now risks having his own name dragged through the courts after the attorneys General insisted they'd found timeline links between the Dieselgate development and Müller's own employment history at the Volkswagen Group.

Volkswagen has always denied Müller had any involvement in Dieselgate's development, and Schneiderman's suit doesn't allege that he authorised it or defrauded anybody, but senior Volkswagen Group insiders are concerned that the CEO is suddenly under fire, and that other executives may follow.

The lawsuit against the Volkswagen Group brought by New York Attorney General, Eric Schneiderman, insisted that Müller's 2006 role as head of project management at Audi meant he knew the urea tanks the company used were too small to meet US emissions standards. Audi is one of the Volkswagen Group's premium brands, along with Porsche and Bentley.

And the lawsuit specifically names Audi's then engine development boss (and former Volkswagen Group director of powertrain and Porsche's ex head of development), Wolfgang Hatz and Audi's then development boss Dr Ulrich Hackenberg.

The clear strategy from the attorneys General is to undermine the Volkswagen Group's claims that a handful of rogue engineers was responsible for Dieselgate, and to bring the entire board into the firing line. While prosecutors in Volkswagen's German home state of Braunschweig are probing 17 suspects over the Dieselgate fraud, none of them are believed to be management board members.

"The New York Attorney General believes there is clear evidence that senior managers at Volkswagen knew very early on what illegal methods were being used to suddenly enable Volkswagen cars to meet US standards," Schneiderman said.

"It was the stubborn and unrepentant culture at Volkswagen that gave rise to the systematic cheating and deception.

"The US complaints confirm our findings. Several management board members were informed and at least neglected to stop the fraud."

Schneiderman, along with the attorneys General of Maryland and Massachusetts, used evidence from US law firm Jones Day, which was given charge of the Volkswagen Group's internal investigation into the gestation of the crisis.

Perhaps critically, the investigation's terms of reference end at the Volkswagen Group's Board of Management, and it cannot investigate the company's Supervisory Board, so it may never be known whether long-term Volkswagen managers, such as former CEO and former Chairman of the Supervisory Board, Ferdinand Piech, had any knowledge of the cheat.

While the Volkswagen Group's own management doesn't have access to the full Jones Day findings, the firm is legally obliged to pass all of its evidence to the US Department of Justice. This has led senior Volkswagen Group personnel to express private concerns that as more and more states delve deeper into the Jones Day evidence, the company could be exposed to more and more surprise lawsuits.

Volkswagen had assumed it had tackled the lion's share of the American litigation after a US$15.3 billion settlement with the US Federal Government and 44 states.

The New York suit shows its Attorney General clearly believes the cheating software began life at Audi in 1999 and was originally conceived as part of a diesel rattle-cancelling system, made necessary due to a cost and packaging decision not to use bigger urea tanks.

It wasn't until 2006 that Volkswagen's engineers in Wolfsburg, Germany, began installing the software on its four-cylinder, 2.0-litre turbo-diesel EA 189 motors to keep nitrogen oxide emissions within legal limits in laboratory conditions, but not in real-world driving.

For all that, Volkswagen's sales have rebounded from a tough start to the year and it outsold Toyota in June to regain its position as the world's biggest car maker.