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Bosch Allegedly Sought VW Legal Cover for Defeat Device

Sept. 7, 2016
Bosch previously rejected as “wild and unfounded” car owners’ claims that 38 of its employees conspired with VW.

Robert Bosch GmbH asked Volkswagen AG (IW 1000/8) eight years ago to indemnify it for using the emissions-cheating defeat device the supplier helped the automaker create for its diesel engines, U.S. car owners said in a new version of their lawsuit against both companies.

Bosch is accused in the lawsuit of conspiring with VW to develop technology that enabled diesel vehicles to evade pollution-control tests. After seeking legal protection from VW for its use of the device in the U.S., the German auto-parts supplier continued to participate in the conspiracy to hide the cheating from regulators, car owners said in a court filing citing a 2008 letter from Bosch to VW.

“Plaintiffs do not have a full record of what unfolded in response to Bosch’s June 2, 2008, letter,” according to the filing. “However, it is indisputable that Bosch continued to develop and sell to Volkswagen hundreds of thousands of the defeat devices for U.S. vehicles” even after it acknowledged in writing that the use of software as a “defeat device” was illegal in the U.S., according to the filing.

Bosch previously rejected as “wild and unfounded” car owners’ claims that 38 of its employees conspired with VW. Rene Ziegler, a spokesman for Stuttgart-based Bosch, declined on Wednesday to comment on the letter, citing the ongoing legal process.

The world’s biggest car-components supplier conducted its own internal probe in the early days of the scandal, which shook Volkswagen a year ago. Bosch Chief Executive Officer Volkmar Denner said in January that Volkswagen bore the responsibility for the emissions-cheating scandal. Bosch hasn’t boosted provisions to deal with legal costs from an earlier 650 million euros (US$731 million). The case’s focus has shifted to the parts maker -- already a defendant in the VW lawsuit in San Francisco -- after the car manufacturer negotiated a preliminary U.S. settlement that doesn’t include the German supplier.

Volkswagen has already agreed to settlements that may total $16.5 billion to get 482,000 emissions-cheating diesel cars off U.S. roads. Those agreements cover car owners, U.S. federal and state governments and VW dealerships.

The Wolfsburg, Germany-based automaker still faces criminal probes, efforts by car owners in Europe to get U.S. Justice Department documents to buttress their own civil suits and a sales ban on many VW models in South Korea. The European Union, where most of the 11 million cars with the defeat devices were sold, is also pressuring VW to compensate car owners in the bloc’s member states.

Bosch's ‘Critical Role’

Lawyers for American car owners revised an earlier lawsuit in August to enhance accusations against Bosch over its alleged role in the decade-long scheme. A copy of the lawsuit filed Friday in a San Francisco federal court removed blacked-out portions to provide a more complete picture of the allegations against Bosch.

“Discovery of Bosch has just begun, but the evidence already proves that Bosch played a critical role in a scheme to evade U.S. emission requirements,” consumer lawyers said last month in a partially sealed filing. Among the details included in the unsealed version of the filing Friday was the demand for indemnification for anticipated liability arising from the use of the “defeat device,” as Bosch called it in the letter.

“Volkswagen apparently refused to indemnify Bosch, but Bosch nevertheless continued to develop the so-called ‘akustikfunktion’ (the code name used for the defeat device) for Volkswagen for another seven years,” the consumer lawyers wrote.

The term akustikfunktion dated back to use by Audi in the 1990s when it “devised software that could switch off certain functions when the vehicle was in test mode,” the consumer lawyers alleged.

Bosch later concealed the defeat device in communications with U.S. regulators once questions were raised about the emission control system in VW vehicles and “went so far as to actively lobby lawmakers to promote Volkswagen’s ‘Clean Diesel’ system in the U.S,” they added.

By Margaret Cronin Fisk

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Licensed content from Bloomberg, copyright 2016.

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