VW Exec Detailed in 2006 How to Evade Diesel Standards

A presentation prepared in 2006 by a high-level Volkswagen AG technology executive shows in detail how the company could cheat U.S. emission tests for diesels, according to multiple media reports.

The short PowerPoint report explains how software could be used to detect the testing process, adjust an engine’s emissions to meet test requirements, and then relax the controls when the test ends. Doing so would make VW’s planned emission control system more durable by easing demands on its performance under real-world conditions.

It isn’t clear how widely the presentation was distributed, and German privacy laws prohibit naming the executive. But the mere existence of the document shows the pollution problem was recognized within VW at least a decade ago, The New York Times says.

The newspaper cites company sources who say the company repeatedly rejected as too expensive proposals by engineers to meet the U.S. standards fairly. The cheater software offered VW a seemingly cheap and low-risk means to meet U.S. diesel emission tests.

Court documents filed in a shareholder lawsuit in Germany also indicate VW management (including former CEO Martin Winterkorn, who resigned last September when the scandal was uncovered) considered the risk of regulatory penalties insignificant, the Times reports.

One U.S. law firm suggested in a memo last summer the company was unlikely to face a fine in the U.S. of more than $100 million for failing to meet the standards, according to the newspaper. It also cites meeting agendas as recent as August 2015, in which high-level executives appeared to give the issue little attention.

The Times says VW’s management, accustomed to a compliant regulatory atmosphere in Germany, was shocked at the eventual response by U.S. regulators. The report adds that Stuart Johnson, the VW executive in charge of the company’s relations with U.S. regulators, said in an internal memo in January—five months after the cheating was disclosed—he thought VW still had four months in which to “discuss the issue privately.”

VW has set aside more than €16 billion ($18 billion) pay for the fallout of the global cheating scandal. Analysts say the eventual cost could be considerably greater.