About this episode This episode delves into the infamous Dieselgate scandal, revealing how Volkswagen engineers manipulated emissions tests to deceive regulators and consumers worldwide. Through investigative storytelling, we uncover the complex web of corporate deception, who among the company’s leadership was involved, and how the scandal ultimately unraveled, exposing the true costs of corporate greed and the importance of accountability. Listeners will gain a deeper understanding of white-collar fraud and its far-reaching consequences.
0:00 A single line of code in eleven million cars was designed to lie, and it caused those cars to emit up to forty times the legal limit of poison into the air.0:11 This wasn't a bug; it was a conspiracy.0:14 Last week, we saw how Wirecard built an empire on phantom money.0:18 This week, we follow the trail of a deception that was just as deliberate, but far more tangible, written in software and paid for with public health.0:29 The story begins with an ambition.0:31 Volkswagen wanted to become the world’s number one automaker.0:36 To do that, it needed to conquer the American market.0:40 Its strategy was “Clean Diesel” — cars that promised European performance with eco-friendly credentials.0:47 There was just one problem.0:49 U.S.0:49 emissions standards for nitrogen oxides, or NOx, were some of the strictest in the world.0:56 Meeting them hurt engine performance and fuel economy.1:00 So, Volkswagen’s engineers faced a choice: obey the law, or find a way around it.1:05 They chose to go around it.1:07 Starting as early as two thousand six, they built a “defeat device.” It was just a few lines of software code, but it was brilliant in its deception.1:18 The software could detect when a car was in a laboratory being tested.1:23 It read the steering angle, wheel speed, and barometric pressure.1:28 When the conditions matched an official emissions test, the car’s full pollution controls would switch ON.1:36 The car would pass.1:37 But the moment the car was driven on a real road, the controls switched OFF.1:42 Performance improved, and the car started spewing nitrogen oxides at up to FORTY times the legal limit.1:50 From two thousand nine to two thousand sixteen, Volkswagen sold eleven million of these cars worldwide.1:57 Jettas, Golfs, Passats.1:59 Audis and Porsches too.2:01 All marketed as clean.2:02 All secretly polluting.2:04 The first clue that something was wrong came not from a regulator, but from a small non-profit.2:11 In two thousand fourteen, the International Council on Clean Transportation commissioned a study with West Virginia University.2:20 They simply wanted to prove how clean modern diesels were.2:24 They tested a VW Jetta and a Passat on the road in California.2:28 The numbers that came back made no sense.2:31 The cars were emitting far more pollution than they should.2:36 The ICCT took its findings to the EPA.2:38 For more than a year, Volkswagen deflected.2:41 They blamed technical glitches.2:44 They issued voluntary recalls that didn't fix the problem.2:48 An internal memo from May two thousand fourteen shows the company KNEW its software was being investigated.2:56 But they continued to lie.2:57 The incentive was clear: admitting the truth would destroy their “Clean Diesel” brand and trigger billions in losses.3:06 Finally, the EPA lost patience.3:08 They threatened to withhold approval for Volkswagen’s two thousand sixteen models.3:14 That was the breaking point.3:16 On a conference call on September third, two thousand fifteen, the company confessed.3:22 Fifteen days later, the EPA went public.3:25 The scandal, now known as Dieselgate, was exposed.3:29 VW’s stock price plunged forty percent in two days.3:32 So who knew?3:33 The CEO, Martin Winterkorn, resigned five days after the news broke.3:38 In his statement, he accepted responsibility but denied any personal wrongdoing.3:44 The U.S.3:44 Department of Justice disagreed; they later indicted him for wire fraud and conspiracy.3:51 An engineer named James Liang was sentenced to forty months in prison.3:56 A manager, Oliver Schmidt, got seven years.3:59 The company pleaded guilty, paying a two point eight billion dollar criminal penalty and a fourteen point seven billion dollar civil settlement.4:09 But the real cost is measured in lives.4:12 One study estimates the excess pollution from those eleven million cars will cause one hundred twenty-four thousand premature deaths.4:22 The deception wasn't just on paper.4:24 It was in the air you breathe.4:26 The scheme collapsed because a few researchers asked a simple question and wouldn't accept a dishonest answer.4:34 They followed the data, and the data led them to the truth.4:38 The lie was so profound, it forced Volkswagen to bet its entire future on the one thing it couldn't fake: an electric motor.4:47 The age of “Clean Diesel” was over, and the age of real-world testing had just begun.
