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Report: Porsche faces German probe for diesel fraud and false advertising

Prosecutors in Germany have expanded the diesel fraud probe to Porsche, Reuters reports, after several raids of Audi facilities earlier this spring. The Stuttgart’s prosecutor’s office indicated employees at Porsche’s U.S. subsidiary were also under investigation, which is focusing on possible fraud and false advertising in the U.S. and in Germany.

Porsche Cayenne

The expansion of the probe to include Porsche, which is part of Volkswagen AG, follows several months of intense scrutiny and searches at Audi and VW sites across Germany, which have included a police search of VW’s law firm. The German probe, which unexpectedly kicked into high gear at the start of 2017, has cast a shadow over Audi, which until that time had mostly managed to avoid the fallout from the VW diesel scandal despite recalls of its 2.0 and 3.0-liter vehicles in the U.S. and other regions.

Porsche had also stayed under the radar of the nearly two-year-old crisis, which resulted in a sales freeze of its Cayenne Diesel model equipped with a 3.0-liter TDI engine.

The expansion of German authorities’ investigation into Porsche AG follows the arrest and charges against of a former Audi AG manager earlier this month. Giovanni Pamio, described as the head of Audi’s V6 engine development for the U.S. market, was charged by the U.S. Department of Justice with conspiracy to defraud the U.S., wire fraud, and violation of the Clean Air Act, for his role in allegedly defrauding U.S. consumers and regulators.

“According to the complaint, after Pamio and coconspirators realized that it was impossible to calibrate a diesel engine that would meet NOx emissions standards within the design constraints imposed by other departments at the company, Pamio directed Audi employees to design and implement software functions to cheat the standard U.S. emissions tests,” the U.S. Department of Justice said in a statement released on July 6.

“Dr Pamio and coconspirators deliberately failed to disclose the software functions, and they knowingly misrepresented that the vehicles complied with U.S. NOx emissions standards, the complaint alleges.”

Pamio was taken into custody in Germany by Munich police in a rare arrest of an executive charged in any part of the diesel investigation. Most engineers and managers charged by U.S. authorities are believed to be in Germany and face no real threat of extradition to the U.S. Only one person charged by the DOJ remains in custody in the U.S. awaiting trial; Oliver Schmidt was arrested by the FBI in Florida after traveling there voluntarily, on vacation. Schmidt is currently in U.S. custody awaiting trial