All language subtitles for Dirty Money - 01x01 - Hard Nox.WEBRip.x264-ION10+STRiFE.English.C.edit.Addic7ed.com

I thought I had found the perfect car.

The VW Diesel Jetta
Wagon. The ad sucked me in.

Volkswagen has more diesel
cars on the road in the US

than every other brand combined.

Boasting a two-liter TDI turbo-charged

clean diesel engine, not only does
it provide excellent fuel economy,

but you'll love the performance, too.

It was the only car that
seemed to have it all.

Drove like a sports car...

Can the Green Car of the Year be fast?

Wasn't too expensive, got great mileage,

and unlike diesels of
the past, it was clean.

Volkswagen Jetta TDI Clean Diesel.

TDI Clean Diesel.

TDI Clean Diesel.

I was beaming with pride as
I drove around the suburbs

or commuted to New York City.

What I didn't know was that I
was driving a killing machine.

What has VW been up to?

We may be looking at the largest
systematic corporate fraud

in the history of the
global corporation.

Volkswagen has admitted
that their clean diesel cars

have been systematically,

proactively engineered to
deceive emissions testing.

It's called a defeat device.
It's designed to defeat the test.

The Volkswagen scandal is widening.

The news just keeps getting worse.

VW share price down 31%.

If you're a VW shareholder
or employee today,

the letters stand for Very Worried.

Volkswagen turned over half
a million American drivers

into unwitting accomplices
in an unprecedented assault

on our country's environment.

Our criminal investigation
is active and ongoing.

We can't undo the damage

that Volkswagen caused
to our air quality.

But what we can do

is offset that damage by reducing
pollution from future sources.

Now, with respect to the
agreement, more specifically,

Volkswagen must offer to buy
back any car that's on the road.

That's nearly 500,000
two-liter diesel vehicles

that are model years 2009 through 2015.

As part of the buyback, Volkswagen...

When I first heard about
the scandal, I was furious.

VW had lied to me.

They had pitched me a
vision of my dream car,

but sold me my worst nightmare.

A car that was polluting 50
times more than advertised.

It's not enough for
VW to just apologize.

They gotta use their folly to
actively make the world better.

Even before that, Kirk suggests...

Weirdly, I was listening to
NPR when my own name came up

in an interview with a PR expert,
on how VW could make things right.

... an investigative
documentarian group,

like a Frontline or an Alex Gibney,

who can come in with
the charge of discovering

what happens in a company

that actually leads to this
type of gross infraction.

Kirk went ahead and made a promo

for this imaginary documentary.

A new series from Alex
Gibney, the director of

The Smartest Guys in the Room,
Coming Clean: Inside Volkswagen.

Fuck Volkswagen.

With unprecedented and unlimited
access from Volkswagen...

There was no way VW
was gonna give me access

to look at the scandal, but
the promo did get me worked up.

Angry as I was, it didn't begin
to describe the fury my wife felt.

She stopped driving the car entirely.

Though she had pasted
"namaste" on our bumper sticker,

a yoga term for "bowing
to the divine in others,"

she had visions of marching in

to the local VW
dealership with a chainsaw.

- And the number.
- Yes.

These two documents...

- Okay, so I sign right...
- Seller signature.

Yep. There we go. We're going
to give you back the car.

I feel so badly because
I love the car...

Yeah.

Um, but when you feel
you've been lied to,

it's really hard to feel okay
about the company, in general.

Sort of like, shame on you, Volkswagen.

- Yeah.
- Right?

Exactly.

Okay, my wife is way too nice

to think about killing
the local dealers.

But she wanted the car out of our lives.

The question she was
asking, and I was, too,

was, "How could this have happened?

How could a company have
lied to its customers

on such a massive scale?"

I decided to look into the scandal.

What I would discover was much darker

and more vast than
anything I had imagined.

I am pleased that at the skilled hands

of a brilliant design
engineer and his staff,

preliminary designs for a German
Volkswagen have been completed,

and the first models will finally
be tested by the middle of the year.

Then you will understand

why I was utterly determined
to lay the groundwork

for the invention of the German
Volkswagen and its ultimate conclusion,

and by that, dear gentlemen,
I mean a successful conclusion!

Okay, it's usually a cheap
shot to bring up Hitler,

but when it came to VW,

he's the man that jump-started
the company back in the 1930s.

In the 1930s,

cars were still a rarity in
Germany, or relatively rare.

It wasn't something
that most people had.

And in the United States, a lot of
people think Henry Ford invented the car

but he didn't, actually.
What he did invent was

how to build cars cheaply
that everybody could afford.

So in the United States,

there was far more middle-class people
who had automobiles than in Germany.

And that really bothered the
Germans and the Nazis, in particular,

because they were
supposed to be superior.

So Hitler hooked up
with Ferdinand Porsche.

Porsche already had some
designs in his drawer.

This idea of a
volkswagen, a people's car,

had been kicking around
for quite a while.

And then he started developing
the car with Nazi money.

Porsche, himself, went to Ford

and looked around on several occasions.

He hired Germans who were
working at Ford, �migr�s.

He brought them back to Germany to
help build the Volkswagen factory.

And it was very
consciously modeled on Ford,

but it was supposed to be even bigger.

They wanted it to be the
biggest factory in the world,

which it eventually became.

There was a celebration in Germany,

to mark the one millionth
people's car since the war.

Over 150,000 people were present
to take part in the jollification.

This included a...

The city of Wolfsburg,

it just doesn't get any more
"company town" than that.

There was nothing there until
they built the Volkswagen factory.

Everything that you
see in Wolfsburg today

has really grown up around
that original factory.

Okay, so, here, that's the
main street in Wolfsburg.

So there was nothing here?

Wolfsburg, as a city, didn't exist.

It's a massive factory.

It's a massive factory.

Nowadays, they are still
employing 60,000 people.

- Really?
- And the chimneys you see over there,

- that's actually the paint shop.
- Uh-huh.

So, this is all
employee housing in here?

Yeah. Basically everyone works, uh,

either directly or at least
indirectly for Volkswagen here.

How does it rank in terms of the
largest factories in the world?

- It's the largest one.
- It is.

There's no other factory, uh...

Right now, they are producing by day,

- round about between 3,000 to 3,500 cars.
- Wow.

VW declined to give
us a tour of Wolfsburg.

So, I sought out the
help of Walter Groth,

a consultant on corporate culture,

who'd worked for 20 years as
an executive for Volkswagen.

You'd been at Volkswagen
for a long time.

Twenty-four years.

When the news broke about
the cheating scandal,

what was your reaction?

My reaction, uh... I was
angry, actually. I was angry.

I took that very personal because, uh,

I was thinking about all the
people working for the brand

and really doing the hard work.

And when you imagine
that this is a company

with more than 600,000 people
working for Volkswagen worldwide,

and more than a hundred factories,

and you have to run this
operation... And all these people,

when you look at the production lines,

at manufacturing, what they do...

When you look at the
people developing a car,

starting with the
designers, for example,

they all want to come up with
the best product possible.

For VW, the road to global dominance

had always led through America.

In the '60s, sales hit new highs,

when VW flew the freak
flag for the counterculture.

The Bug was a real people's car,
mechanically simple and down-to-earth.

You could be high on mescaline

and still shift gears
or repair the engine.

And the Bus was a crash pad on wheels.

It was an amazing case of rebranding

because this car was
basically designed for Hitler.

Then after the war, it becomes
the symbol of the counterculture.

But VW didn't keep up with the times.

As the counterculture
gave way to the Reagan era,

VW didn't innovate and its sales dropped

as fast as the quality of its cars.

During all these years, sales
went down, losses were mounting.

Volkswagen was close to being insolvent.

I was asked to join the newly-formed,
uh, North American region

because we needed to do a turnaround
of the Volkswagen of America.

In 1993, Volkswagen sold roughly

38,000 cars a year in the United States.

That's a market with 16-17 million cars.

So 38,000 is, uh, ridiculous.

When Volkswagen in the United States,

with the Beetle, sold
almost half a million cars.

The savior for VW was Ferdinand Piëch.

The grandson of Ferdinand Porsche,

Piëch was professionally
and personally productive.

He sired 12 children
with four different women.

He also infused VW with a new DNA.

Whenever there is war,
fewer remain in the end.

There are always winners and losers.

And I intend...

along with our VW partners
around the world...

to emerge victorious.

Yeah, a little faster is more fun.

Piëch, he was the head of Audi before.

He's a brilliant man.

It's brilliant, but it's
dangerous, okay? Kind of.

I mean, Piëch was a tough guy
and he knew what he was doing.

I don't feel I can't
communicate with others.

But there are individuals with
whom I don't want to communicate.

And they complain about
my lack of communication.

However, that's not unintentional.

When Piëch started,
Volkswagen was down and out.

They were just about bankrupt
and their quality sucked.

It was a disaster. Their value
at the time was a disaster.

The average, uh, workshop
visit of an average car

was three to four
times in the first year.

He had to turn the company
around. And it's tough.

Dr. Piëch came just in
time to make that happen.

Before him, Volkswagen
was rather thinking small,

and with Piëch, the big
thinking really started.

Piëch, uh, he's the typical
inventor. He has the big product ideas.

He comes up with stuff
that's just, uh... Wow.

Where did he get that from?

He has this idea of diesel.

At the time, diesels were
something for tractors.

Maybe for, uh, big Mercedes.

And he said, "It's going to be diesel."

He made the diesel smaller,
invented TDI. People, they loved it.

The new TDI. It arrived
with a hip new ad campaign.

A diesel that was fun to
drive, powerful and clean.

Volkswagen had huge
success with TDI engines.

In Europe, people started
to love the diesel.

But there was always the problem

that what comes out from the
exhaust, um... Not really healthy.

The basics of diesel and
gas engines are the same.

A series of explosions move the
pistons, which turn the drive shaft.

Diesel fuel is much
more efficient than gas

and produces much less carbon dioxide.

But diesel fuel exhaust
disgorges much nastier stuff.

Particulate matter and
nitrogen oxide, called NOx,

that causes air pollution
and damages human lungs.

This is personal for me.

When my family was living

in the NOx-filled smog
of Southern California,

my daughter developed
exercise-induced asthma.

When she was playing
soccer in high school,

she collapsed in front
of me from lack of oxygen.

NOx is not good.

No. NOx, nitrogen oxide,
is very, uh, nasty stuff.

Elements of nitrogen
oxides mix with ozone,

and then chemically changes
into what we call smog.

It's a factor in acid rain.
It's damaging for plant life.

It causes asthma in children,
causes cardiac problems, cancer.

People will die prematurely.

To keep the efficiency of
diesel, but to cut down on NOx,

manufacturers like VW
tried to create NOx traps

that caught and burned the stuff
before it left the tailpipe.

But the special parts
needed were expensive,

and had to be replaced
every few thousand miles.

Yet, they were the only way to meet

the NOx pollution
standards set in the US,

which were much more
strict than in Europe.

Today, I'm directing the EPA

and the Department of
Transportation, Energy and Agriculture

to take the first steps
towards regulations

that would cut gasoline consumption
and greenhouse gas emissions

for motor vehicles.

We have set in motion a national policy

aimed at both increasing gas mileage

and decreasing greenhouse gas pollution

for all new trucks and cars sold
in the United States of America.

Solving that problem
in the US was critical

for the strategy of the man

who would eventually be
tapped to follow Piëch

as the head of VW, Martin Winterkorn.

Dr. Piëch and I

have been working together
for almost 30 years.

And as you know, Dr. Piëch

has always regarded
innovation as the top priority.

So, we agreed that he would focus on

innovation and I would safeguard it.

Winterkorn came

and they did this strategy
called Strategy 2018.

We wanted to have the
most satisfied customers.

We wanted to have the
most satisfied employees.

We wanted to achieve good results
in order to invest in the future.

And we wanted to make the best cars.

The upshot of which will be
that by 2018 we are going to be

the preeminent car
manufacturer in the world.

Volkswagen never was great in America.

The Volkswagen Bug was kind of a fluke.

But America's a very important market.

At the time, it was the world's largest.

So, those Americans, they
have to buy our diesel cars.

That's what he wanted for
the United States, diesel,

which is incredibly hard
to do in the United States.

Everyone knew this.

And that's how it all started.

The pressure on everybody

to increase sales became unbearable.

Under pressure and
when people feel fear,

they might do things you
don't want them actually to do.

Determined to conquer
the American market,

VW built a new green factory
in Chattanooga, Tennessee.

To comply with American
pollution standards,

VW retooled its product line and
introduced a new clean diesel, TDI.

Its pitch to Americans was captivating.

Cars that were low-cost, low-pollution,

got good mileage and were fun to drive.

Perfect.

With its new green
profile, VW's CEO boasted

about its new-found commitment
to social responsibility.

And Chattanooga stands for
the Volkswagen way of life.

Sustainable, reliable and successful.

Now, more than ever, Volkswagen
has everything it takes

to win the hearts and
minds of American customers.

I was one those people
who stood up and cheered.

I was proud to own a VW. Auto
experts were cheering too.

Somehow, VW seemed to have solved
a problem no one else could:

how to clean up dirty diesel
engines in small, low-priced cars.

I was completely surprised when I
suddenly saw the clean diesel thing

in the United States.

And first thought was,

"Great. That's great.
They solved the problem.

Wow. I'm really deeply impressed."

Then I looked at the price of the cars

and, hmm, well, it's
actually right in the market.

But I was asking myself,
"How did they do it?"

And I'm not an engine developer,
I'm not an engineer, so...

There might be a way nobody else has
ever seen. Uh, great, they did it.

VW's solution to the diesel problem

caught the attention of a group
focused on clean transportation.

They studied VW diesels
not to see if they were bad,

but why they were so good.

And whether the US cars could serve
as a model for other companies.

The man in charge of the group
was an American named John German.

I describe myself as a
pragmatic environmentalist.

I spent about a decade each with
Chrysler, then EPA, then Honda

before I wound up at this non-profit,

International Council
on Clean Transportation.

The goal's always the environment.

We focus on working with
regulators worldwide,

not with legislatures.

So we're trying to help the
regulators do their job better.

The whole VW scandal started in Europe.

In 2011-2012, there's a report
from an organization called JRC.

It actually showed
some anecdotal evidence

of high diesel emissions in Europe.

But the report was basically ignored.

We had this brainstorm that
there was a missing piece of data,

which is what's happening in the US.

And so, in 2013, we decided
to test some diesels in the US.

Primarily because we
expected them to be clean.

And then we would take that
data back to Europe and say,

"Look, they're clean in the US.
How come you can't do it in Europe?"

German needed to find someone

to test what was coming out
of the tailpipes of the cars,

first in the lab and then on the road.

The contract went to a group at
the University of West Virginia.

Car geeks who wanted to see

if clean diesel was for
real in any kind of car.

This is a portable
emissions measurement system

that we use to measure emissions
from vehicles on a real-time basis.

It's a miniaturized version of a
laboratory-grade measurement system

where it's kind of in a
shoebox-size, uh, equipment,

where you can put it in the vehicle.

This is used for a very specific
purpose, which is in-use measurement.

So we tap into the tailpipe
and it measures two things.

It measures the exhaust flow rate,
how much exhaust is coming out,

and then what the constituents
of the exhaust are.

So it's just a simple math, flow
rate times the concentration,

which is going to give you the,
uh, the amount of, uh, pollutants

that are coming out of
the tailpipe. So that's...

Arvind Thiruvengadam
was part of the team

that did the diesel pollution
test for John German.

They focused on European
diesels being sold in the US.

Whenever we do real-world testing,

we do expect certain deviations
from the certification number.

Conditions such as ambient temperature,
road grade, traffic and such,

which you always cannot
expect the manufacturer

to be at the lowest possible emissions.

But there is an acceptable
level of deviation.

Usually, five to six times deviation
is part of real-world activity.

But the kind of deviations
we were observing

from the VW passenger cars
were significantly higher.

During the road test,
the VW TDI was sending

up to 40 times more NOx into the
air than the VW lab test numbers.

West Virginia University,
then they came to us.

Once they said, you know,

"We have these high emissions
and we can't explain it."

And my first reaction was,

"There must be something
wrong with the vehicle."

Literally, a malfunction.
It wasn't operating properly.

But we tested these vehicles at
the California emission laboratory

and they passed the standards,

which meant there was nothing
wrong with the vehicle.

And at that stage, I was pretty
darn sure this was a defeat device.

There's a long history of defeat devices

and I worked at EPA during some of
these defeat device investigations.

The most recent major
one was a 1998 case

for heavy-duty engine manufacturers,

in which almost every
manufacturer of heavy-duty engines

was calibrating them to increase
emissions when they ran down the highway.

That scandal cost them about $1
billion in total fines and remedies.

And now with the VW case, I knew
I was sitting on a time bomb.

But the words "defeat device"
never would cross my lips,

'cause you just don't say that
about a multi-billion dollar company

when you're a little,
uh, NGO with 30 employees.

It was just too dangerous.

We'd have been potentially
sued out of existence

if it had even been implied we were
accusing VW of having a defeat device.

To avoid retaliation by VW,

German first revealed
his findings in 2014

in San Diego, in a small
academic conference.

In the audience were a
handful of VW executives.

They must've realized for the first time

that investigators were on their trail.

But German was careful
not to call out VW

when it came to publishing results.

The compromise that we came up with

is that we did post the
report publicly on our website,

but it refers to vehicles A, B
and C. We did not identify them.

Now, two days before we
put the report online,

I sent a courtesy e-mail to VW, saying,

"This report's coming out. Here it is.

By the way, vehicles A and B are yours."

Raise your hand, sir.

Do you swear or affirm

that the testimony you're going
to give in these proceedings

depicts the whole truth
under penalty of perjury?

- I do.
- Thank you.

You are Stuart Johnson?

I am.

Are you currently employed

- at Volkswagen Group of America, Inc.?
- Yes, I am.

- How long have you been employed there?
- Uh...

All together, I've worked
at Volkswagen 33 years.

In this e-mail, uh, it's true isn't it,

that you're talking about the West
Virginia University study. True?

Yes.

Second-to-last sentence:

"Some presenters indicated they
suspected cheating." You see that?

Yes, I do.

- That's something you wrote, right?
- That's correct.

So you were aware, at
least as of April 8, 2014,

that cheating was one of
the possible explanations

- for what was going on. True?
- Yes.

You state, quote,

"We will have to be careful
with this going forward."

- That's correct.
- Why did you say that?

Because I didn't like hearing
that, out in a public forum,

Volkswagen was being
accused of cheating.

Well, what was it specifically

that you all would need
to be careful about?

I didn't like the fact that there
was a... That that would, um, lead to

some kind of suspicion
against our company.

But how could you be careful in
order to alleviate suspicions?

You have no control over suspicions
third parties have, right?

Yes.

So what was it specifically that
you needed to be careful about?

My reason for writing that

was that I wanted to
try to manage the message

and part of managing that message
is engaging with the agencies.

The agencies Johnson tried to manage

were the EPA and California regulators.

Following the San Diego presentation,
California did its own tests.

They confirmed the
West Virginia results.

Inside the lab, the
pollution emitted by the cars

was well within government limits.

But on the road, NOx levels
were dangerously high.

That caught the
attention of Alberto Ayala

at the California Air
Resources Board, known as CARB.

What was different about this is,
how far off they were, the magnitude.

We're not talking about just a
little bit above the standard.

Forty times the limit was the average.

If you look at some data
points that we have, um,

in some cases, it was
80 times the limit.

And now you have two data points.

We have two studies on our hands,
saying this just doesn't make sense.

At that point, that's
when we went from research

to, "Now we need to turn this
into a regulatory action."

What followed was 60 months of
intense interaction with the company,

back and forth, because
it just escalated.

We would do some testing,
generate questions,

send them to the company. They'd
be expected to bring us answers.

They would bring answers,
we would go back to the lab

and try them and then
generate more questions.

CARB was asking tough questions,

and back in Wolfsburg,
executives were terrified

that honest answers would
reveal a long trail of deceit.

CEO Martin Winterkorn
received an urgent e-mail

from VW's head of quality
management, Frank Tuch.

"A thorough explanation of the
dramatic increase in NOx emissions

cannot be given to the authorities.

It can be assumed that the
authorities will then investigate

whether Volkswagen implemented
a so-called defeat device."

Rather than come clean,

VW thought its only alternative
was to stall for time.

Technological leadership

is not just defined anymore
by horsepower and torque.

The joy of economical and emissions-free
driving, ladies and gentlemen,

will be the currency in coming years.

The company was, uh,
unfortunately, uh, dismissive.

It's like, oh, you know,

"Maybe your instruments
are not well calibrated,"

or, you know, "Oh, you have academics,

graduate students running around,

maybe they did it wrong and,
uh, you guys gotta go check in

because you gotta use
experts to make sure that... "

And we would do all of that, right?

'Cause, again, all along, we're
thinking, "This is not a defeat device.

This is just a technical problem."

It's true, isn't it, that
these various reasons were given

in attempt to mislead
the agency into believing

there were technical explanations
for the high NOx level

as opposed to an explanation
that involved cheating? True?

In retrospect, yes, that's true.

Mr. Johnson, I've handed you
what's been marked as Exhibit 25...

The two company representatives

that we interacted with the most

were Stuart Johnson and Oliver Schmidt,

who at the time was actually based here.

So he represented the company when
it came to certification issues.

Let's first have a look

at Volkswagen's history
of diesel in the US.

With this technology, we won, in
2009, the Green Car of the Year.

Unfortunately, we got new
emission regulations in the US.

So, we had to comply with, um,

with Bin 5 or ULEV
standard all over the US...

In May of 2014, was
Oliver Schmidt your boss?

Yes, he was.

When the West Virginia
University report came out,

did Oliver Schmidt express to you

that one of the possibilities
for the explanation of this report

- is that we were cheating?
- No.

We were able to increase
fuel economy by a lot,

and we reduced the NOx raw
emission of the engine by 40%

in order to comply with
future emission regulations...

Oliver Schmidt was not
sharing what he knew

with many of the US team,
including Stuart Johnson.

But the cheating and how to
handle it was an open secret

among many executives in Germany.

Schmidt wrote an e-mail posing a
fundamental question about strategy.

"It should first be decided
whether we are honest.

If we are not honest,
everything stays as it is."

Translation: Keep cheating
and conceal the defeat device

in a storm of obfuscating e-mails,

misleading technical reports and
endless diversionary meetings.

For every meeting that Oliver and I had,

our technical teams probably
had another five, ten meetings.

There was so much going on and
it just got really convoluted.

That was a challenge here. It didn't
feel like we were making progress.

We were negotiating, holding
meetings with them, talking about...

As CARB turned up the heat on VW,

Stuart Johnson was suddenly promoted

and Oliver Schmidt was quickly
transferred back to Germany.

Do you believe that Oliver Schmidt

was transferred back to Germany

and you moved into that position
to allow plausible deniability?

No, I don't believe that.

Did you have a reputation
at your company for honesty?

Yes.

- Being forthright?
- Yes.

Did Oliver Schmidt share
that reputation that you had?

No.

Back in Wolfsburg,

Schmidt and the other German
execs came up with a plan.

VW would announce a recall
and pledge to fix the problem.

For the moment, CARB and
the EPA seemed satisfied

that VW was finally ready
to do the right thing.

They told us, "Oh,
while we do this recall,

we will put a fix to
this issue on the NOx."

Right? Uh, in the hope
that I would come back

and tell my team, "We're done."

They'd convince you with their data

so you wouldn't bother
to keep testing the car.

Correct, and of course that's not
how we do business here, right?

They did the recall and
we got some test vehicles.

We went back into the lab,

and it wasn't giving us in-use emissions

that match the in-certification test.

Would it be a fair statement
that at the time that

Volkswagen Group of
America was telling CARB

that it would update its software

to more closely attempt
compliance with regulatory limits,

in fact, it was updating the
software to further its cheat?

Objection to the form of the question.

True?

I would say, yes, that's true,
knowing what I know today.

VW did not fix the
problem. Just the opposite.

The company fixed the defeat device
to make it even better at cheating.

Through VW's own test,

engineers discovered that
sometimes the pollution controls

would actually work as
advertised on the road.

But that caused wear and
tear on the exhaust system.

So to protect the cars, VW
engineers changed the software,

so pollution controls were shut off

as soon as the driver
moved the steering wheel.

You strap a vehicle onto a dynamometer

and the front wheels never turn.

So they looked for movement
of the front steering wheel

and deactivated emission controls
if they found that movement.

How could they possibly believe

that they could go out and just
change from one egregious strategy

to a different egregious
strategy and get away with it?

I still don't understand that.

That was without doubt
the stupidest thing VW did.

The time that we wasted giving
them the benefit of the doubt,

that's really what... what, um,
what got me, that I was, um...

I was naïve thinking that the company
was operating, uh, in good faith

and trying to find a solution,
because it was all wasted.

They could've come clean from day
one and saved us a lot of trouble.

Very systematically, we were checking...

We thought it's this.
It's not, it's not.

You go down and eliminate
all other options.

The only thing remaining is
it's gotta be a defeat device.

I always thought

that there was a good
explanation for what was happening

and that it wasn't cheating.

And the first time that I really...

had the feeling that something was wrong

and cheating was very possibly happening

was when we met with the Air
Resources Board on July 8th, 2015.

In my opinion, I would characterize
it as, uh, a pretty rough meeting.

Lots of strong talk from the agencies.

They said, "We think
you're recognizing the FTP.

We don't know how you're doing it,
but we're convinced you're doing it."

Who above you,

as far as management's concerned,
did you discuss it with?

Well, I've discussed it a lot
with the management in Germany.

Uh, Oliver Schmidt almost called
me immediately after the meeting,

within a day or so, saying,

"What went on at the
meeting? How did it go?"

I said, "It didn't go very well."
He said, "Yes, I heard that."

I'm gonna stop you there.

Did you ask anybody whether
or not you were cheating?

- No, I didn't.
- Why not?

To me, the people I was in contact with

were the people that were deceiving me.

When it was clear VW's
fog machine wasn't working,

VW agreed to a series of
meetings with CARB in August 2015.

Oliver Schmidt told me

that he was authorized
to come to the US,

he was authorized to
meet with Alberto Ayala,

and he was authorized
to make an admission.

The reason VW finally came
clean is actually fairly simple.

EPA told them that if
they didn't come clean,

they would not certify
any 2016 vehicles,

including their gasoline vehicles.

That means VW can't sell cars.

No sales of new cars.

There were comments made at the meeting

that this was a financial decision.

There was an intentional premeditated

cost-benefit analysis to cheat.

That's what was stated in the meeting.

So, it sounded like a pretty
strong confession to me at the time.

Stuart did approach me and we
went aside and had a conversation,

and that's when he admitted to
me that it was a defeat device.

That was the first time.

We told Mr. Ayala

the vehicle recognizes the dyno,
it recognizes the test cycle

and that this was a software gimmick.

That some software had been developed

by somebody who thought
they were smarter than you.

I was very upset. I mean,
I was probably very, um...

not very polite,

and I think that Stuart probably
took most of the brunt of it

simply because he was
the company at the time.

But I was very upset.

Read for me, if you
would, into the record,

what the quotes were that
you're quoting Dr. Ayala saying

to your conversation, if you would.

So, his quotes are,

"You played us. You tried to
put a pillow over our head.

You wasted a lot of our time and money.

We will come after you hard on this.

This has taken too much
time and raised expectations.

Now it's just going to confirm what
NGOs have been saying all along.

We will write a nasty press release.

I don't believe your company anymore.

This is going to be a lot of
money and you better not fight it.

And don't give me any
shit on the midterm review

when I ask for more stringency."

Thank you.

There was tremendous pressure that
the company was putting on itself

to really get to that point where
they wanted to be number one,

and they basically wanted to get
there at whatever cost, and...

now, here we are.

Ladies and gentlemen,

please welcome president and CEO

of Volkswagen Group of
America, Michael Horn.

So, let's be clear about this.

Our company was dishonest

with the EPA and the
California Air Resources Board,

and with all of you.

And in my German words,
we've totally screwed up.

The irregularities found
in our diesel engines

are the antithesis of
everything Volkswagen stands for.

Even I, at this point, don't
have answers to all the questions.

But we are working diligently to
find out exactly what happened.

Is it conceivable

that Winterkorn didn't know
about the cheating devices?

Is that conceivable?

If you believe in the tooth
fairy, then it's conceivable.

To our employees, I'd like to say,

I know with how much dedication,

honesty and integrity you
pursue your work day after day.

I am well aware that much of it
has been thrown into question.

But it would be wrong
to cast general suspicion

on the hard and honest
work of 600,000 people

because of the terrible
mistake made by the few.

Dr. Winterkorn, this
happened under your watch.

You own it.

Don't tell me that some engineers
at some place did something wrong.

Don't tell me that.

You have my word,

we will do all of this with the greatest

possible openness and transparency.

Winterkorn denied any knowledge

of the defeat device
or the cheating scandal,

but he was forced to resign the
day after giving the statement.

The US Congress began to investigate,
with one question in mind:

how high did the deception go?

Raise your right hand
and I'll swear you in.

Michael Horn was the CEO of
Volkswagen Group of America.

Do you swear the testimony
you're about to give...

One of the company's best salesmen,

he'd worked at VW for 25 years.

I'm told that this was a decision

made in Germany at the corporate level.

Is that correct?

Two answers to this.

Um, first of all, the
investigations are ongoing,

but this was not a corporate decision.

From my point of view, to
my best knowledge today,

the corporation in no board meeting

or no supervisory board
meeting has authorized this.

But Michael Horn knew
about the defeat device.

A year and a half before
his testimony to Congress,

Horn had received an
e-mail from Oliver Schmidt.

Schmidt told Horn about the defeat
device and the likely consequences.

"Intentional conduct equals penalties."

In a conversation I
had with Michael Horn,

he had mentioned that he had received

a report from Oliver in May of 2014.

Did he tell you what it was about?

Not in detail. No.

- Or did he tell you in summary?
- He just said that it, uh...

raised the possibility of
cheating at that point in time.

At that point of time, I had no
understanding what a defeat device was

and I had no indication whatsoever

that a defeat device could
have been in our cars.

This was a couple of software engineers

who put this in for whatever reasons,

and I would also like to find out...

That story of a small group
of engineers at Volkswagen

doing something on their
own is unbelievable, okay?

It's unbelievable, okay?

At Volkswagen, if you want a
pen, you need three signatures.

New York state took up the fight

and launched a civil suit,
proclaiming fraud by VW.

Today's suit and the nine-month
investigation that led to it

are designed to hold Volkswagen
accountable for their actions

and to make sure that
no car company again

ever considers this type
of widespread deception.

The individuals who
purchase cars are victims.

Those who suffer from this
extra pollution are victims.

So is every other company
that followed the rules

and was trying to produce
a car complying with the law

to meet these emission standards.

To have these folks cheating

and programming their
cars to commit fraud,

in a way, their competitors
are also victims.

We're trying to establish
a level playing field,

that everyone has to follow the rules,

no one is above the law

and no level of corporate
cover-up can excuse this.

Did you come up with
evidence that indicated

that Winterkorn knew what was going on?

Yeah. Going back to, I think, 2006,

it's clear that things at
least came to his attention.

We've reviewed millions
of pages of documents,

thousands of internal e-mails.

It is clear that there had been a
very frantic effort to cover this up.

They had phony recalls,

they looked at other penalties
against carmakers and said,

"We can survive this sort of a penalty."

There were signals sent, "We may
be putting a document holdout,"

which sends a signal, maybe you
wanna destroy some documents.

Hundreds of very high-level executives
and engineers knew about this.

We didn't find one
e-mail from anyone saying,

"We shouldn't do this," or,
"This is against the law,"

or trying to put the
brakes on this system.

So this was a corporate
culture permeated by fraud.

Now, all of these cars are out
of the legal compliance, clearly.

I had a phone conversation
with Michael Horn

after I'd heard from Oliver Schmidt,

that he's authorized
to make an admission.

Things were looking bad,
you know, dire outcome.

So, um...

Michael Horn called me.

I told Mr. Horn,

"It looks like we've been
cheating and we've been caught."

And did Mr. Horn then immediately
issue a stop-sale order,

to stop selling these cars that
Volkswagen had been cheating to sell?

Not that I'm aware of, no.

Would it be fair to say that
Michael Horn's primary focus is

increasing sales?

Objection. Calls for speculation.

In respect to his position at
Volkswagen Group of America?

Calls for speculation.

I would say yes.

You know what's really great

about the all-new 2012 Volkswagen
Passat TDI Clean Diesel?

Not only does it provide
excellent fuel economy,

but you'll love the performance, too.

Delivers turbo-charged
performance and great mileage.

Passat TDI Clean Diesel with up
to 814 highway miles per tank.

Just one reason Volkswagen

is the number-one selling
diesel car brand in America.

If you want a look into the psyche,
into the thinking of a company,

you should look at the
advertising campaign.

The old wives' tale is funny.

How do you like my new car?

Isn't diesel dirty?

Oh, say it's beautiful,
for Christ's sake.

I think it's beautiful,
but aren't diesels dirty?

Yeah, that's true.

Oh, that used to be dirty. This is 2015.

No, no, no. Listen to me, Terry.

- Diesel in Latin means dirty.
- I'll prove it to ya.

You're gonna ruin your scarf.
Oh, look what she's doing.

See how clean it is?

It's not dirty, but you
still have a dirty mind.

The audience is like, "It's very funny.

That's the way it is." But it was a lie.

Every time one of those ads ran,

the executives of these companies
knew that they were telling a lie,

and they'd sold, uh, ultimately about

11 million of these
cars around the world.

That's a lot of cars, a
lot of excess pollution.

They seemed to have a
culture in the company,

a feeling as though
they were above the law.

Between state and federal sanctions,

VW was forced to pay
over $25 billion in fines,

and to buy back over 550,000
vehicles from angry owners.

Through lawsuits and investigations
by government regulators,

more details would be revealed about

VW's vast cheating campaign in the US.

And across the ocean,

a journalist named Hans
Koberstein uncovered

a much more pervasive problem in Europe.

Our main question was is
Volkswagen the only one?

What about all the other diesel
car manufacturers in Germany?

World leaders in diesel technology.

Do they use illegal defeat devices, too?

My colleagues and I decided to do a test

to measure the emissions
on the road of German cars.

BMW, Mercedes and a Volkswagen
with a defeat device.

Do they poison the
air more than allowed?

When we tried to get the portable
emission measurement system

to do the testings,

in this time there
were just four companies

that offer this service in Germany.

We called all of them and
they all of them told us,

"Mmm. Mmm, we don't
want to do it with you."

Or they had no time, or they said,
"Oh, you can't do this testing."

"Why not?"

"You can't do this testing."

They just didn't want to do it with us.

Those service agencies that
offer the mobile measurements

depend on the car industry, so they
didn't want to harm their clients.

And so, we had to go to
Switzerland to do this testing.

We did the same test

on the street that we did in the lab.

We compared how is the
car acting in the lab

and how is the same
car acting on the road.

And it was amazing to
see that it is dirty.

Not just a little bit.
It is extremely dirty.

The Volkswagen with an
illegal defeat device

and the BMW and the Mercedes

emitted up to 400-500% higher
than during the laboratory test.

That shows clearly that those
cars have a defeat device.

When Hans asked the car
companies for comment,

they responded by threatening to sue

for hundreds of millions of dollars

to prevent the broadcast.

But Hans pushed forward and exposed

not only the cheating but the way
the German government enabled it.

Every manufacturer in Europe
is using calibration strategies

that, in the US, would be
considered defeat devices.

Every one of them.

And what's really interesting here

is that if you read the language
for what a defeat device is,

in Europe and the US,
they're almost identical.

Almost word for word.
So, what's going on here?

What it really comes down to is
that there are three exceptions

for cases in which calibration
changes are allowed.

And one of them is for safety
and protection of the engine.

In Europe, the manufacturers just claim,

"Oh, I need this for
protection of the engine."

Or, "I need this for protection
of the after-treatment system."

And those claims go unchallenged.

The understanding of
the German government

is defeat devices are generally allowed

because there's an exemption
to protect the engines.

Any engine must be protected,

so all the defeat devices we
know in diesel cars are allowed.

That's the interpretation of the
German government and it is absurd.

It seems crazy that the
German government cares more

about protecting engines
than human beings.

- Is it this way throughout Europe?
- Well, the primary issue in Europe

isn't so much their requirements which,

for the most part, are world-class.

But Europe does tend to have
a problem with enforcement.

The standards are set at the
European level for all the countries.

But enforcement is done at
the individual country level.

Further, every country agrees

to accept enforcement
in every other country.

So this leads to a situation which
the manufacturers go shopping.

Which country is going to
do the least enforcement?

In Europe, it's a
game of musical chairs.

If enforcement is too
strict in France or Finland,

try Luxembourg or Malta.

They may need the money or
factories that might be built,

so they're willing to look the
other way when companies cheat.

Companies often claim they can't
improve safety or pollution controls

or they'd go out of business.

For VW, the situation is
even more prone to corruption.

The German province of Lower Saxony

actually owns 20% of VW's voting stock.

Given that fact,

is it likely that Lower Saxony will
conduct a thorough investigation

of its biggest profit center?

The government covered
the car companies.

Why? Because of its jobs.

They're very worried if
people are out of a job

because then they're lining
up outside of the agencies

and collect money and they
vote them out of power.

Any national government
in Europe has the problem

if it has a national car industry.

"Oh, how are we going to
deal with this problem?"

They all think, "Mmm, better not
to harm our national car industry,"

because they can only enforce the
law for their own car industry,

not for the German or French
one, just for the British one.

And so, any national
government is thinking,

"Should I harm my national
car industry if others won't?

No, I will not do
this. I am not stupid."

And they are still selling dirty cars.

To this day, despite the VW scandal,

car manufacturers are selling dirty cars

throughout Europe and the world.

It always sounds good to
say, "We need the jobs."

But what if you were offered
a job at an assembly line

to make products that killed
people? Would you take that job?

What's going on in Europe?

They have these plans for how
they're going to reduce air pollution,

and they've had these for 10, 20 years.

They made projections about
what's gonna happen in the future.

They have not been meeting their
projections for ambient air quality.

The pollutants in the air are
higher than they've always projected,

and now we finally know why.

The one thing that the governments
in Europe did after the VW scandals,

they did a lot of testing.

So we have in-use tests on
over 150 vehicles in Europe now,

and it's clear.

The diesels in Europe are
six or seven times dirtier

than the standards allow.

So the ambient air quality
in every city in Europe

is worse than it should've been,

and this is having health
impacts and premature deaths.

In Germany, it's more than
10,000 premature deaths per year

only due to nitrogen dioxide.

That's much more than we have

in losses and deaths
due to traffic accidents.

I am living in Berlin
for almost 20 years now,

and I am living in a
zone where it's green.

Lot of trees, parks. There's
a lake, there's little traffic.

We did measurements on
the road where I live

and those measurements showed
that the levels of nitrogen dioxide

are much higher than the average
annual limit that is legally allowed.

I wouldn't have ever expected that.

That's really a huge problem.

We think we have an air pollution
problem wherever we see many cars

and wherever many cars
are driving at the moment.

But the problem of nitrogen dioxide is

that's even there where you do
not expect it to be in the cities.

We did measurements in a kindergarten

that's very close to where I'm living.

The levels within the kindergarten
were above the legal limits.

The German car companies didn't
want their customers to know

how harmful were their diesel cars.

VW, in particular, wanted to fight back.

To show the benefits
of clean diesel cars,

VW embarked on a plan to do
their own tests on human beings.

Step 1: Establish a phony
research company called EUGT,

funded by VW, Mercedes and BMW, to
study the effects of diesel exhaust.

This secret plan to fool the public

was uncovered by a lawyer
representing angry American consumers.

So, EUGT, the fake nonprofit,
pays approximately $730,000

to a company called Lovelace
Respiratory Research Institute, LRRI,

to conduct a study.

The purpose of the study,
purportedly, was to attempt to show

that the new diesel
technology represented

by these Volkswagen TDI
Clean Diesel vehicles

was much more environmentally friendly
than the old diesel technology.

It would not result in
the type of health problems

that diesel exhausts from old
diesel technology would create.

And the person that was
in charge of that study

was a guy by the name
of Dr. Jake McDonald,

whose deposition I just recently took.

Did you ever have any information that

any of the monies that you all received

to do the study came from Volkswagen?

I presumed that because Volkswagen
was a contributing member of EUGT

that they contributed
money to the study.

But I didn't know...

I had no details in terms of
who contributed what amount.

All I knew was the
contract was with EUGT.

So, the setup happens
in Lovelace's laboratory

in Albuquerque, New Mexico.

They procure a dyno
to run these cars on.

That dyno was selected by
none other than Stuart Johnson,

and personally delivered
there to the LRRI facilities.

You had involvement in
assisting with this study.

True?

Limited involvement.

Stuart Johnson wasn't the
only VW executive involved.

James Liang, a German engineer

who helped with the development
of the defeat device,

also helped shape the study.

James Liang personally
delivered a TDI 2013 red Beetle

for purposes of doing this testing.

Volkswagen USA insisted

that James Liang be given
real-time access to LRRI's data.

Is it unusual for a
manufacturer to require

real-time monitoring of what
is happening in your study?

Objection. Vague.

Calls for speculation.

Um...

It's the first time that
I've experienced that.

In your entire career, this
has never happened previously?

Correct.

That was necessary to ensure

that these so-called clean diesel
vehicles would run in test mode

and produce the fraudulent emissions for
purposes of this fake scientific research.

What they're doing at the same time
is they're attempting to compare

their so-called new
technology with old technology.

So they are running a 2004
Ford F-250 on the dyno also.

In the original draft, the
original proposal, the study,

they were actually going to have a
human sitting on an exercise bike.

There's actually a diagram
of this in the proposal

where a human participant would
sit riding an exercise bike.

They would then be exposed to gas
directly from the diesel vehicles.

And then, they would poke and prod
that person later to determine, uh,

what type of health effects

they would see from
this person being gassed.

Were you involved in discussions
about doing this study on humans?

- Yes.
- In retrospect, does that seem...

ridiculous?

Objection. Calls for speculation.

In retrospect, the
optics aren't very good.

Obviously, one cannot help to think back

throughout history of
another series of events

involving individuals being gassed

by a person who was
actually at the opening

of the very first Volkswagen factory

and gave a speech there in
connection with that opening.

Did you recommend against
doing this study on humans?

Um...

I don't recall.

I know that, um, David Geanacopoulos
was involved in the discussion,

and he didn't like the idea.

But VW did not abandon
the idea of the experiment.

Someone suggested that the
test be performed on NHPs.

Non-human primates.

They set up tubing

from the back of the tailpipe
up through the ceiling.

The gas would then come
down into the chamber.

These monkeys have been
trained to watch TV,

and so what they would do

is they would actually
play for them cartoons

and have them watch cartoons.

After they would've been exposed

to the TDI Clean Diesel gases,

they're then subsequently exposing
them to the Ford F-250 gases.

The nitrogen oxide and
other particles of exhaust

that would be coming out of this F-250

are very, very dirty, and
very noxious, very harmful.

Wake up! Where's everybody going?

The monkey would be exposed to that gas

for a three- or
four-hour period of time,

after which time they would take the
monkey back to a separate facility

and test it, taking blood samples.

They would stick a tube
down the monkey's throat,

in order to scrub samples from
inside of the monkey's lungs.

Do you know what happened to the monkeys

after the testing was completed?

We didn't ship them to Volkswagen,

if that's what you're asking.

They... We...

I don't recall. My... We...

It was a non-terminal study, so
the animals were not euthanized

to be able to look at any sort
of more invasive responses. So...

When Dr. McDonald realized

that these emissions that he
tested were, in fact, fraudulent,

and that he had been duped

and set up to be used
by Volkswagen as a pawn,

he said that this report
cannot be published.

You know, there is a concern,
obviously, amongst Volkswagen that,

if a jury were to ever hear
about any of this stuff,

that could really impact
the verdict in this case,

and, in fact, Volkswagen has
filed a motion with the court,

specifically asking the court to
exclude any mention of any of this.

Today, the Department of Justice,

the Environmental Protection Agency

and the US Customs and Border Protection

have reached a global
resolution with Volkswagen

that carries both criminal
and civil penalties.

As part of this resolution,

Volkswagen is pleading
guilty to three felonies.

Conspiracy to defraud the United
States, to commit wire fraud,

and to violate the Clean Air
Act, obstruction of justice,

and importation of goods
by false statements.

In January 2017, James
Liang pled guilty to fraud

and was sentenced to
40 months in prison.

Oliver Schmidt was arrested in
Miami after a Caribbean vacation,

just as he was about to
board a flight to Germany.

In August of 2017,

he pled guilty to conspiracy
to defraud the government.

He was one of six VW
executives indicted by the US.

Did anybody ever instruct
you during this timeframe

to basically keep your mouth shut?

I don't recall that.

He said that's not a "no."

I don't remember.

You're aware that Oliver
Schmidt recently pled guilty

to a felony in federal court
in Michigan, are you not?

I'm aware of that.

As of September 2017,

Stuart Johnson has not
been charged with a crime.

There are indications that he
may be a cooperating witness

for the ongoing federal investigation.

Michael Horn resigned from VW
in 2016 and returned to Germany.

Martin Winterkorn remains untouched
by the criminal investigation.

Outside of Germany, other carmakers,

including GM and Fiat Chrysler,

have been accused of
using defeat devices.

But even after all the fines, the
criminal charges and the scandals,

VW realized its dream of becoming
the world's largest carmaker.

At the same time, with the
election of President Trump,

the federal government declared

that corporate profits
would now be more important

than protecting the environment.

In order to fulfill my solemn duty
to protect America and its citizens,

the United States will withdraw

from the Paris Climate Accord.

Thank you.

This announcement made
the US, Syria and Nicaragua

the only three nations on Earth

to abandon the effort to
prevent global warming.

The Trump administration
has also threatened

to undermine CARB in California,

because of CARB's strict
air-pollution controls.

When you look at a
state like California,

we have goals for 2030 and 2050.

You know, long-term goals.

We need to start thinking now

and laying out ideas for
how we're gonna get there.

It's hard for people to
remember now, New York,

when the smog problem, caused by NOx...

It's exactly the stuff that was
being emitted from these cars.

It was really bad back
in the '60s and '70s.

It was a city where
people would get sick,

people would die from the smog.

So, this is something we spent decades

in the United States trying to clean up.

We've had great success.

The American people don't
want to undo the regulations.

State environmental laws are
a very important backstop.

The federalist system was designed

so that states can fill in if
the federal government does not.

That's why we're pushing so
hard on some of these policies,

because this is really about
impacting on people's lives.

When my wife turned in our car,

it was sent to an asphalt
graveyard for VW's dirty diesels

in the shadow of the old
Detroit Lions stadium.

From here, according to the company,

they will either be fixed,
recycled or destroyed.

Every car in the lot represents

the sum of an economic
calculation made by the company

between risk and reward.

In that way, VW is not so
different from other companies.

They see themselves as
financial abstractions,

pressured by competition to build
models on profit, loss and market share.

But when many of us think
of the lungs of our children,

scarred by NOx fumes that
could have been contained,

we wonder if the equation is
missing an important variable.

How to balance the cost of a car
with the value of a human life?

- Synced and corrected by chamallow -
- www.addic7ed.com -