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VW engineer pleads guilty to emissions cheating - Agrees to cooperate with US prosecutors

Published:Sunday | September 11, 2016 | 12:00 AM
The Volkswagen logo on the grill of a vehicle produced by the German automaker.
A Volkswagen Touareg diesel SUV is tested in the Environmental Protection Agency's (EPA) cold temperature test facility in Ann Arbor, Michigan, in October 2015.
Volkswagen engineer James Robert Liang (left) leaving court on Friday, September 9, in Detroit, after pleading guilty to one count of conspiracy in the company’s emissions cheating scandal,


A Volkswagen engineer has pleaded guilty to one count of conspiracy in the company's emissions cheating scandal, advancing a criminal investigation by agreeing to testify against others.

James Robert Liang, 62, of Newbury Park, California, entered the plea on Friday in US District Court in Detroit to one count of conspiracy to defraud the government through wire fraud.

Liang is the first person to enter a plea in the case, and his cooperation is a major breakthrough in the Justice Department's probe into the scandal. Government documents say others were involved and point to multiple emails in German that likely came from VW employees in Wolfsburg, Germany.

Volkswagen has admitted to installing software on about 500,000 two-litre diesel engines in VW and Audi models in the US that turned pollution controls on during government tests and turned them off while on the road. The Environmental Protection Agency (EPA) found that the cars emitted up to 40 times the legal limit for nitrogen oxide, which can cause human respiratory problems.

Liang, who began work for VW in 1983 in Germany and also worked in the US, was indicted in June on one count of conspiracy to commit wire fraud and another count of violating the Clean Air Act. According to a plea agreement unsealed on Friday, Liang admitted that he and others planned software known as a defeat device that could cheat US emissions tests after recognising that a diesel engine they were designing could not meet customer expectations and stricter emissions standards. Using the defeat device enabled VW to obtain a certificate from the EPA needed to sell the cars in the US.




The engineer pleaded guilty to the conspiracy charge before Judge Sean Cox. He will be sentenced on January 11. The judge said that guidelines call for Liang to serve five years in prison. He also could be fined up to US$250,000.

Volkswagen wouldn't comment on the plea but said on Friday that it continues to cooperate in the investigation.

Liang, who wore a dark suit and tie, mostly responded "yes" or "no" to the judge's questions at the Friday hearing but also read a brief statement in which he admitted to the fraud. He had a German-speaking interpreter with him in court but did not use her and gave all responses in English. The judge noted that he was not a US citizen and could be subject to immigration action.

Assistant US attorney Mark Chutkow told the judge that two or more of Liang's colleagues also had knowledge of the conspiracy.

According to the indictment, Liang and his co-conspirators were tasked with designing new diesel engines for the US market that complied with stricter emissions standards for nitrogen oxide emissions that went into effect in 2007. Within VW, it was referred to as the US '07 project.

Prosecutors say Liang and the other engineers realised that they could not design a diesel vehicle that both met the stricter US emission standards and performed well enough to satisfy customers. Therefore, they began work on defeat-device software that would cheat on the tests, the indictment says.

Within VW, the cheating software was referred to as "cycle beating, or "emissions tight" mode, among other terms, according to the indictment.

In one 2007 meeting with government officials in Ann Arbor, Michigan, Liang participated as his co-conspirators misrepresented that VW's diesel vehicles complied with US emissions standards, according to the plea agreement.

"Liang knew that VW was cheating by implementing the defeat device and that he and his co-conspirators were considering deceiving EPA in this meeting," the plea agreement states.

The indictment says that in May 2008, Liang transferred from Volkswagen headquarters in Germany to the US to help oversee the launch of the new "clean diesel" models. Investigators uncovered internal company emails that show that Liang and other VW engineers exchanged ideas about how to "effectively calibrate the defeat device" so that the cars would recognise when they were undergoing US emissions testing. The software was designed to recognise when the cars were being tested on a treadmill-like device called a dynamometer.