Companies & Markets

Oliver Schmidt

The noose tightens around VW in Dieselgate scandal

Oliver Schmidt will stay behind bars for seven years. Source: Handelsblatt montage.

Source: picture alliance, Fotolia [M]

Another senior Volkswagen executive has been sentenced to a lengthy prison term in the United States as part of the long, drawn out scandal over the company’s cheating on diesel exhaust emissions testing.

Oliver Schmidt, 48, who plead guilty to charges of conspiracy to defraud the United States, wire fraud, and violations of the Clean Air Act, was sentenced to seven years in prison by Federal Judge Sean Cox in Detroit, who also fined him $400,000. It was the maximum sentence allowed under the plea deal he reached with prosecutors.

Mr. Schmidt, who has been in jail since his arrest in Miami in January, formerly headed the VW environment and engineering office in Dearborn Hills, Michigan and was responsible for communicating with US officials on VW’s compliance with clean air laws. He will be given credit for time served.

I must say that I feel misused by my own company in the diesel scandal.

Oliver Schmidt
former VW official

Another VW official, James Liang, a German national and a VW engineer, was earlier sentenced to a three-year and four-month prison term and fined $200,000.  In all, six VW officials were indicted in the United States and another seven are facing charges in Germany.

“I must say that I feel misused by my own company in the diesel scandal or Dieselgate,” Mr. Schmidt wrote to the judge this week, according to a letter filed in federal court and reported by the tabloid Bild Zeitung. Mr. Schmidt went on to say that he lied during a meeting with Alberto Ayala, a California Air Resources Board executive, and followed a script laid out by VW executives and a company lawyer.

“In hindsight, I should never have agreed to meet with Dr. Ayala on that day,” he said, according to the letter, Reuters said. “Or better yet, I should have gone to that meeting and ignored the instructions given to me and told Dr. Ayala that there is a defeat device in the VW diesel engine vehicles and that VW had been cheating for almost a decade. I did not do that and that is why I find myself here today.”

The mention of 10 years of cheating is sure to register strongly with German prosecutors who are also investigating VW’s deception and have jailed two current or former executives who are awaiting trial.

VW has paid $2.6 billion in criminal fines and another $14 billion in civil penalties after pleading guilty to knowingly violating environmental rules with its diesel system, which would lower emissions during test periods but ramp them up when on the open road.

Another top VW official, Zaccheo Giovanni Pamio, who was involved in engine developed at VW subsidiary Audi, is also awaiting trial in Germany. US prosecutors have asked for Mr. Pamio’s extradition because he is Italian. German citizens cannot be extradited to foreign countries.

The prosecutors have raided VW and Audi offices and carted away boxes of written material as their search proceeds up VW’s corporate ladder.

Charles Wallace is a Handelsblatt Global editor based in New York. To contact the author: c.wallace@extern.handelsblatt.com.