Fiat Chrysler manager lied about emissions even after VW scandal broke, indictment charges

By Mike Spector and David Shepardson (Reuters) - A grand jury indicted a senior manager at Fiat Chrysler Automobiles NV on charges he lied to regulators about diesel emissions, alleging the deception continued even after a scandal over cheating on government environmental tests had engulfed rival Volkswagen AG. The indictment of the Fiat Chrysler manager, unsealed Tuesday, said others 'known and unknown' to the grand jury criminally conspired to mislead regulators and customers about emissions in diesel-powered vehicles, a scheme they described in emails seized upon by U.S. Justice Department officials

Reuters September 25, 2019 01:05:35 IST
Fiat Chrysler manager lied about emissions even after VW scandal broke, indictment charges

Fiat Chrysler manager lied about emissions even after VW scandal broke indictment charges

By Mike Spector and David Shepardson

(Reuters) - A grand jury indicted a senior manager at Fiat Chrysler Automobiles NV on charges he lied to regulators about diesel emissions, alleging the deception continued even after a scandal over cheating on government environmental tests had engulfed rival Volkswagen AG.

The indictment of the Fiat Chrysler manager, unsealed Tuesday, said others "known and unknown" to the grand jury criminally conspired to mislead regulators and customers about emissions in diesel-powered vehicles, a scheme they described in emails seized upon by U.S. Justice Department officials.

The charges came on the same day that prosecutors in Germany indicted Volkswagen's current and former CEOs and the company's board chairman on charges they failed to inform investors of that company's diesel-emissions fraud after they learned of it in 2015. Also on Tuesday, German automaker Daimler AG agreed to pay 870 million euros in fines connected to a separate investigation of diesel emissions cheating.

Emanuele Palma, a diesel drivability and emissions senior manager at Fiat Chrysler, faces charges of conspiracy, fraud, violating federal environmental law and making false statements stemming from work on Fiat Chrysler's emissions system in U.S. vehicles with diesel engines, according to the indictment unsealed Tuesday.

Palma was arrested by the FBI at his residence in Bloomfield Hills, Michigan, without incident this morning, and was scheduled for a court hearing Tuesday afternoon, a Justice Department spokesman said.

The indictment describes what it refers to as a "scheme" to use sophisticated software tricks to deceive regulators about the emissions performance of diesel engines offered in Ram pickup trucks and Jeep sport-utility vehicles.

After the disclosure of Volkswagen's emissions fraud in September 2015, the indictment states that the U.S. Environmental Protection Agency asked Fiat Chrysler for more testing of its diesel vehicles. In November 2015, the EPA warned Fiat Chrysler that it suspected some of its vehicles were using secret software to defeat emissions tests.

The indictment charges that months later, in a June 2016 meeting, Palma "personally provided false and misleading representations" to regulators.

Lawyers for Palma, an Italian citizen, could not immediately be identified from the legal documents. Prior to 2016, Palma worked for VM Motori SpA, a diesel engine manufacturer that was 50% owned by Fiat Chrysler until 2013, when it purchased the remainder of the company.

Fiat Chrysler said in a statement Tuesday morning it was "just learning about details of the matter. We will continue to cooperate fully with authorities."

SETTLED CIVIL CLAIMS

The developments in the U.S. criminal probe signal additional scrutiny of Fiat Chrysler's environmental practices on the horizon, despite the automaker's January settlement of civil claims stemming from the alleged emissions violations.

Fiat Chrysler agreed to pay about $800 million to resolve civil claims from the Justice Department, state officials and customers alleging the company installed illegal software allowing more than 100,000 diesel-powered vehicles to dupe government emissions tests and then pollute beyond legal limits on the road.

The settlement did not resolve any potential criminal liability, the Justice Department said when unveiling the agreement.

Fiat Chrysler at the time said the settlement did not change the company's "position that it did not engage in any deliberate scheme to install defeat devices to cheat emissions tests."

The renewed focus from U.S. prosecutors on Fiat Chrysler's alleged emissions violations follows cases against Volkswagen and a number of that automaker's current and former executives over use of illegal software to fool government diesel-emissions tests and mislead regulators and consumers.

Volkswagen and some of its executives pleaded guilty to criminal charges in the scandal, and the German automaker paid billions of dollars in penalties.

German prosecutors on Tuesday charged former Volkswagen CEO Martin Winterkorn and other company executives in the scandal. A Winterkorn lawyer said the former CEO rejected the claims. He was previously charged in the United States.

The indictment unsealed Tuesday says Palma and unnamed co-conspirators "purposefully calibrated the emissions control system" in Fiat Chrysler vehicles to produce lower emissions under federal test cycles and release higher amounts of nitrogen oxides during real world driving conditions. They concealed the those moves from U.S. environmental regulators, the indictment alleged.

The alleged fraud allowed Palma and the unnamed co-conspirators to obtain a favorable fuel economy rating that made Fiat Chrysler vehicles more attractive to potential customers, the indictment said. Prosecutors alleged the conduct resulted in deceptive claims to customers that the vehicles featured "clean EcoDiesel engines," the indictment said.

(Reporting by Mike Spector and David Shepardson; Editing by Jan Harvey and Nick Zieminski)

This story has not been edited by Firstpost staff and is generated by auto-feed.

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