Investigating Dieselgate

Merkel Government Guilty – or Not Guilty

main 77939783 Michael Kappeler dpa – Angela Merkel testifies Bundestag dieselgate investigative committee March 8 2017 Untersuchungsausschuss
Angela Merkel appearing before Bundestag's special committee on emissions in March. Source: Michael Kappeler, DPA

The German government either had no role in the Dieselgate emissions scandal that cost automaker Volkswagen billions in fines in the United States, or was complicit in letting automakers flout emissions limits in a way that could yet occupy authorities in the European Union. These are the diverging verdicts of lawmakers after a year-long inquiry by a special German parliamentary committee.

The committee majority of Chancellor Angela Merkel’s Christian Democrats and her Social Democrat coalition partner said “there was no reason to criticize” the government’s role either before or after the scandal broke in late 2015, when US authorities first accused Volkswagen of using defeat devices to cheat during emissions tests. Instead, “inadequate European regulations” were to blame, these lawmakers said in the report, which was made public on Thursday.

But the opposition parties in the Bundestag interpreted evidence culled from mountains of files and a string of hearings – including a session with Ms. Merkel herself – very differently. In its minority opinion, the Left Party said the committee had proved “complicity between politics and industry,” while Green Party representatives said: “The government and its regulatory agencies developed a culture of turning a blind eye.”

The 719-page report brings together a slew of details that suggest regulators could have known about irregularities for years, and that the scandal could occupy EU authorities as much as it has US counterparts.

German governments are known for their support to the industry, which offers work to almost 800,000 people and brings in around €240 billion annually as VW, BMW Mercedes-maker Daimler and their suppliers export their cars and parts around the globe. Germany is home to the world’s three largest car components makers, Bosch, Continental and ZF Friedrichshafen. Ms. Merkel’s cabinet as well as previous governments have successfully lobbied in the EU to protect the industry’s interests, for instance, by not making new emissions laws too strict. Some critics say the ties are too cozy, a view echoed by the opposition parties’ criticism.

Unsurprising as these diverging positions might be, the 719-page report brings together a slew of details – about emissions testing rules, communication between the government and its agencies and the car industry, and expert opinion – that suggest regulators could have known about irregularities for years, and that the scandal could occupy EU authorities as much as it has US counterparts. In January, US  prosecutors charged six VW managers and employees for their actions in the emissions scandal.

While US emissions standards focus on nitrous oxide (NOX) emissions, EU standards are built on CO2 levels in exhaust fumes and car taxes are based on how much carbon dioxide a vehicles produces. As the report states at some length, discrepancies in CO2-measurements have plagued Volkswagen and the German government since they vowed to clear up the scandal almost two years ago. State prosecutors in Braunschweig are looking into at least one case of possible C02-emissions manipulation.

Shortly after the scandal broke in the US, Volkswagen reported 800,000 cars could be affected by “irregularities” regarding CO2 targets. The Bundestag report refers to 130 VW models initially thought suspect, but goes on to say that by December 9, 2015, VW had reduced the number of suspect models to nine. It quotes from a draft memorandum, prepared by the transport ministry at that time, that VW “had until now not been able to ascertain why” CO2 infractions had been measured. (Volkswagen told newsweekly WirtschaftsWoche, a Handelsblatt sister publication, that its first report had been based on “worst-case estimates.”)

The report also provides a timely reminder that the transport ministry has for months failed to release its own CO2 emissions measurements, conducted in parallel to NOX measurements as the scandal in the US unfolded. WirtschaftsWoche has obtained the government’s initial test scores, which show that the thirty most polluting models – from German and foreign manufacturers – emitted between 10 percent and 36 percent more CO2 than allowed. The ministry told Wirtschaftswoche that the measurements were a “byproduct” of NOX-testing and “irrelevant” as a result, while a number of car makers claimed the ministry had since repeated its tests and found all emissions in order.

The report details instances going back years in which regulators found models made by various manufacturers to be in breach of emissions standards, and ways the authorities and industry found to rectify such problems – quite legally in the eyes of the ruling Christian Democrats and Social Democrats, questionably in the eyes of the opposition Green Party and Left Party members of parliament. Authorities in 2011 allowed VW to tweak the software of a Golf diesel that had failed an initial test. Four years later, US authorities scrutinized the same engine model, EA189. Inspectors discovered cheat software – and the emissions scandal affecting 11 millions cars worldwide took its course.

 

This article originally appeared in WirtschaftsWoche. Gerrit Wiesmann, an editor with Handelsblatt Global, contributed to this article. To contact the authors: annina.reimann@wiwo.de, martin.seiwert@wiwo.de and silke.wettach@wiwo.de

We hope you enjoyed this free article.

Subscribe today and get full access to market-moving news in Europe's leading economy.