VW Board vs ex-CEO Piech: rancor erupts over diesel cheating lies

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Ferdinand Piech, chairman and CEO of Volkswagen Group, at 2000 Paris Motor Show

Ferdinand Piech, chairman and CEO of Volkswagen Group, at 2000 Paris Motor Show

Statements from the boards of directors of automakers are generally dry, dispassionate, and formal.

So the language of a terse item issued yesterday by the board of Volkswagen Group was remarkable in its directness.

Not to mention its inferences about the company's former CEO Ferdinand Piech, who remains a powerful and major shareholder.

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The statement summary read, "The Supervisory Board of Volkswagen AG emphatically repudiates the assertions made by Ferdinand Piëch as reported recently in the media."

The main body of the English-language version posted on the group's corporate website said:

A similar account, which alongside the former CEO was directed above all against a number of current and former members of the Executive Committee of the Supervisory Board, was already given by Ferdinand Piëch in spring 2016 in the context of the internal, independent investigations.

Consumer Reports tests 2015 Volkswagen Jetta TDI diesel in 'cheat mode,' October 2015 [video frame]

Consumer Reports tests 2015 Volkswagen Jetta TDI diesel in 'cheat mode,' October 2015 [video frame]

This account was subsequently examined in close detail by law firm Jones Day. No evidence was forthcoming indicating the accuracy of these allegations, which were classified as implausible overall.

In addition, all affected members of the Executive Committee of the Supervisory Board, acting independently of each other, have unequivocally and emphatically rejected all assertions made by Ferdinand Piëch as untrue.

The Board of Management will carefully weigh the possibility of measures and claims against Mr. Piëch.

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To be clear, that means that VW Group is considering taking legal action against the scion of the family that founded the company, who ran it as chairman and CEO from 1993 until he was deposed in April 2015.

The impetus for this remarkable eruption, as reported by the Associated Press, was the pre-publication release of an article from Bild am Sonntag, the German business newspaper.

That article asserted that Piech had given early warnings to four members of the supervisory board about the use of "defeat device" software in its diesel vehicles.

2015 Volkswagen Golf TDI SE

2015 Volkswagen Golf TDI SE

That software was designed specifically to violate U.S. law by making the cars stay within legal emission limits during EPA tests.

In real-world driving, however, they were found to emit up to 35 times the highest amount of nitrogen oxides permitted under U.S. emission laws.

That scandal ultimately spread to almost 600,000 4-cylinder and V-6 diesel vehicles of multiple models by Audi, Porsche, and Volkswagen in the U.S.

Ferdinand Piech, chairman and CEO of Volkswagen Group, at 2000 Paris Motor Show

Ferdinand Piech, chairman and CEO of Volkswagen Group, at 2000 Paris Motor Show

Globally, more than 11 million diesel vehicles from Volkswagen's various brands were found to include the software.

That does not mean they were all illegal in the countries where they were sold; the U.S. emission standards were among the strictest in the world when they took effect on January 1, 2008.

Thus far, the scandal has cost VW Group more than $20 billion in the U.S. alone. The company also pleaded guilty to three felony charges of violating U.S. law.

CHECK OUT: VW diesel probe finally reaches to top; Winterkorn investigated by German prosecutors

The company has continued to maintain that the deception was a localized affair confined to a small number of engineers.

But a report summarizing the results of a thorough independent investigation by U.S. law firm Jones Day into the affair has still not been made public, despite a promised delivery date of last April.

In part, that's because legal probes by German states and Germany itself continue, drawing in part on that material and further questioning of VW executives.

Martin Winterkorn, (now former) CEO of Volkswagen AG, at opening of VW engine plant, Silao, Mexico

Martin Winterkorn, (now former) CEO of Volkswagen AG, at opening of VW engine plant, Silao, Mexico

Two weeks ago, those investigations finally reached former CEO Martin Winterkorn, a longtime protege of Piech who succeeded him as chairman after Piech attacked him and was then ousted by VW's board in a remarkable shakeup in April 2015.

The Bild am Sonntag article says Piech told investigators he had asked Winterkorn about the matter in March 2015, after learning of it from an informant.

After that, it says, he told the four board members.

Winterkorn, on the other hand, testified in front of the German parliament that he only learned of the diesel cheating problem shortly before the EPA announced it publicly in September 2015.

In yesterday's statement, the VW supervisory board emphatically rejected Piech's claim that he had informed four of its members.

Whether the board takes legal action against him for that claim should prove fascinating to watch.

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