‘Code words’ slowing VW probe?

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Volkswagen AG investigators are struggling to make headway through data secured from more than 1 500 laptops and other devices and probably won’t have a complete report on the carmaker’s emissions cheating by the end of the month, according to people familiar with the status of the investigation.

The probe has been slowed by the use of dozens of code words, including “acoustic software”, for the illicit technology Volkswagen used to turn off pollution controls when cars were on the road, said the people, who asked not to be identified because the investigation is confidential. The obfuscation along with partly insufficient and outdated computer systems made it difficult to find evidence concrete enough to hold individual employees accountable, they said.

 “We’re in consultations regarding the clarification of the diesel issues,” Volkswagen said in an emailed statement. “We’ll comment in the second half of April.”

Nearly every step of VW’s efforts to recover from the cheating scandal has taken more time than expected. The company pushed back its reporting date for last year’s earnings, delayed its shareholders’ meeting and sought a month’s extension on a court deadline for negotiating a solution for rigged cars in the US. Most of the 11 million tainted cars are still on the road after a sluggish start to a recall in Europe and as talks in the US remain unresolved.

 “Further delays, not higher costs, are the real bear case” for Volkswagen, Stuart Pearson, a London-based analyst with Exane BNP Paribas, said in a note on Tuesday. “With deadlines fast approaching, we believe investors would ‘tolerate’ costs of up to 20 billion euros ($22.7 billion) to 25 billion euros just to put the issue behind VW.”

The shares rose 1.2 percent to 112.15 euros at 9:58 a.m. in Frankfurt. Volkswagen has lost nearly 16 billion euros in market value since the scandal broke in September.

Stephan Weil, the prime minister of the German state of Lower Saxony, the company’s second-largest shareholder, had called for a “ complete clarification” by this month on how the cheating originated. Volkswagen will report last year’s earnings figures on April 28.

The carmaker has so far insisted that a small group of individuals were responsible for the so-called defeat device and that senior management was unaware of the scope of the issue until shortly before it became public on September 18. Former Chief Executive Officer Martin Winterkorn probably missed warning signs including a May 2014 memo, according to a Volkswagen statement last month.

About 450 internal and external investigators have focused on about 20 employees linked to the deception, according to the people familiar with the probe, which is being led by US law firm Jones Day with assistance from Deloitte LP. Weil told lawmakers last week that investigators had done hundreds of interviews. Proceedings have dragged on because many interviewees were reluctant to provide insight due to fear of the legal consequences, said the people. VW sent about 2 000 so-called litigation hold letters to employees in an effort to prevent data from being deleted.

A full account of the wrongdoing will be critical for Volkswagen to move on from the crisis. VW had planned to provide a comprehensive report on the wrongdoing by its annual shareholder meeting, which was delayed to June from April 21 due to uncertainty over the financial impact of the scandal.

BLOOMBERG

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