German Authorities Raid Daimler Offices Over Diesel-Emissions Fraud Probe
May 23 2017 - 12:19PM
Dow Jones News
By William Boston
BERLIN -- German authorities turned up the heat on Daimler AG in
an investigation into alleged diesel-emissions fraud, raiding the
company's Stuttgart headquarters and other sites to secure
evidence, prosecutors said on Tuesday.
The search of offices of the maker of Mercedes-Benz cars
involved more than 230 officials and 23 prosecutors at 11 sites in
the German states of Baden-Wuerttemberg, Berlin, Lower Saxony and
Saxony. Investigators confiscated files and computer drives
containing sensitive data.
Daimler shares were trading slightly higher than Monday's close
of EUR67.74, but after news of the raids shares fell sharply before
bouncing back in late afternoon to EUR67.15.
The investigation of Daimler was launched in March and comes on
the heels of heightened enforcement of emissions standards in the
wake of Volkswagen AG's admission in 2015 that it rigged millions
of diesel-powered vehicles world-wide to cheat on emissions
tests.
Prosecutors in Stuttgart are investigating allegations that
"known and unknown employees" at Daimler engaged in "fraud and
criminal advertising relating to the possible manipulation" of
diesel emissions systems, Daimler said in a statement.
Daimler said it was cooperating with authorities, declining to
elaborate.
The German investigation coincides with a similar investigation
in the U.S. Last month, Daimler said it had withdrawn an
application to certify model year 2017 diesel vehicles in the U.S.
in light of the investigation.
Since the disclosure of Volkswagen's emissions-cheating by U.S.
authorities in September 2015, further investigations have been
launched into other car makers around the world suspected of
manipulating diesel emissions. Volkswagen has agreed to pay nearly
$25 billion in penalties, fines, legal fees and compensation for
consumers.
Fiat Chrysler Automobiles NV said last week that it would modify
the software on more than 100,000 diesel powered vehicles in the
U.S. in a bid to resolve allegations by U.S. authorities that Fiat
installed software on the vehicles that allowed them to pass
emissions test but exceed U.S. emissions limits during normal road
driving.
Nevertheless, the U.S. Justice Department is near suing Fiat
Chrysler and alleging the Italian-American auto maker used illegal
software to cheat on government emissions tests, people familiar
with the matter said, despite a recent proposal from the company to
regulators on fixing the technology.
Federal prosecutors are expected to file the lawsuit against
Fiat Chrysler as soon as Tuesday, though the timing could slip, the
people said. The suit is expected to accuse Fiat Chrysler of using
defeat-device software that allowed roughly 104,000 2014-2016
model-year Jeep Grand Cherokee sport-utility vehicles and Ram
pickup trucks to pass government emissions tests and then pollute
far beyond legal limits on the road.
The Wall Street Journal has reported that the U.S. probe could
eventually cost Fiat more than $4 billion in penalties, depending
on how the investigation unfolds.
Prosecutors have declined to elaborate on their investigation of
Daimler and it is not clear whether Daimler faces any significant
penalties. The company warned in April that U.S. authorities could
determine that its emissions control system used an illegal defeat
device to suppress emissions as defined by U.S. law.
European laws regulating the use of software to regulate
emissions is less stringent that U.S. law. That's why the German
investigation of Daimler is focusing on false advertising, analysts
said. Daimler could be found guilty of false advertising if it
knowingly understated emissions when seeking to have diesel
vehicles certified.
Write to William Boston at william.boston@wsj.com
(END) Dow Jones Newswires
May 23, 2017 12:04 ET (16:04 GMT)
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