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    The logo of German carmaker Volkswagen (VW) is pictured at the company's head quarters on November 22, 2016 in Wolfsburg, northern Germany.

    Exhausting Saga: Volkswagen Executive Charged With Fraud, More Arrests to Follow

    © AFP 2017/ Ronny Hartmann
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    US authorities have charged a Volkswagen executive with fraud and conspiracy, alleging he helped cover up the "dieselgate" emissions scandal – although there are suggestions the company's future isn't so cloudy.

    Oliver Schmidt, who led the German automaker's US regulatory compliance office from 2012 to March 2015, appeared in a Miami court on January 9 to face charges he knowingly lied to US regulators, although he entered no plea.

    He was arrested January 7, as he prepared to make his way back from to Germany, following a winter vacation in the US — and reports suggest prosecutors are preparing to arrest more high-level German executives.

    Dozens of Volkswagen officials in Germany are already said to have hired US criminal defense attorneys over the course of 2016.

    The FBI affidavit has fingered Schmidt as a key player in the deception and obfuscation campaign employed by Volkswagen, claiming he knew as early as April 2014 that Volkswagen vehicles' real-life emissions diverged significantly from their test levels, and subsequently developed a plan with other employees to conceal the discrepancy from regulators.

    He is known to have informed senior executives in July 2015 of the sophisticated cheat devices that suppressed emissions in tests, and said regulators were not aware of their existence. Volkswagen then authorized its continued concealment. A key source of information on Schmidt is aid to be James Liang, former Volkswagen engineer, who pleaded guilty in September 2016 to helping devise the devices.

    The arrest represents the first ever in the long-running controversy, which began September 2015.

    First, the US Environmental Protection Agency filed a complaint against Volkswagen, alleging the company had built in devices that allowed vehicles to pass strict US emissions tests, while releasing up to 40 times the permitted amounts of nitrogen oxides during actual driving.

    Volkswagen CEO Martin Winterkorn gives his closing speech during the Volkswagen group night ahead of the Frankfurt Motor Show (IAA) in Frankfurt, Germany
    © REUTERS/ Kai Pfaffenbach/File
    Volkswagen CEO Martin Winterkorn gives his closing speech during the Volkswagen group night ahead of the Frankfurt Motor Show (IAA) in Frankfurt, Germany

    The Department of Justice subsequently opened a separate probe into the company, leading to the resignation of chief executive Martin Winterkorn and the collapse of Volkswagen's share price by 20 percent — €15 billion (US$16bn). Upon his departure, Winterkorn admitted the firm had installed up to 11 million of these devices in cars it sold worldwide, and set aside over US$7 billion to deal with the scandal's fallout.

    The figure has since risen to over US$16 billion, which includes US$15 billion for fixing and/or replacing affected cars in the US and US$1 billion compensation for any excess emissions caused by the offending cars. The criminal investigation into the activities of Volkswagen and key employees during the period is separate, and will result in separate punishments.

    Volkswagen's cheating of emissions was first uncovered in 2013 by an independent West Virginia University research unit, which was granted US$70,000 to study emissions and determine why no car's emissions were as efficient as Volkswagens'.

    Despite the ill omens for the firm, Volkswagen's share price rose to its highest level since the scandal broke in September hours after the arrest was announced.

    The rise was driven by the release of sales figures for 2016, which indicate a 3.8 percent rise in exports, with sales rising strongly in Asia-Pacific, China, France, Italy and the UK, more than offsetting a fall in local sales. In all, the firm sold 5.99 million cars over the year.

    Related:

    New Volkswagen Pollution Settlement Adds $1Bln to October Agreement - US Agency
    Volkswagen to Reimburse Legal Costs of $175Mln Incurred in Diesel Case
    Volkswagen to Slash 23,000 Jobs in Germany by 2020
    Dieselgate: Volkswagen Emissions Scandal is Just 'Tip of Iceberg'
    Tags:
    emissions scandal, criminal activity, emissions, chief executive, CO2 emissions, cars, business, arrest, Environmental Protection Agency (EPA), Volkswagen, Germany, Europe, United States
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