Bosch worked 'hand-in-glove' with VW in emissions fraud: lawyers

August 17, 2016 6:25 PM EDT

The logos of German carmaker Volkswagen is seen at a VW dealership in the Queens borough of New York, September 21, 2015. REUTERS/Shannon Stapleton/File Photo

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By David Shepardson and Joel Schectman

WASHINGTON (Reuters) - German auto supplier Robert Bosch GmbH was a "knowing and active participant" in a decade-long scheme by Volkswagen AG to evade U.S. emissions laws, according to lawyers for U.S. owners of polluting VW diesel vehicles.

In a court filing late on Tuesday in U.S. District Court in San Francisco, the lawyers cited confidential documents turned over by the German automaker to plaintiffs attorneys in making the new allegations against the auto supplier.

Volkswagen declined to comment on the filing, except to say that it had no effect on its multibillion-dollar settlement of a civil complaint over the diesel scandal. The filing was made a day after sources briefed on the matter said the automaker has held preliminary talks with the U.S. Justice Department to settle a criminal probe into the emissions cheating case.

Most of the allegations involving Bosch remain under seal because the documents have been designated as confidential by VW, the plaintiffs' lawyers said in the court filing.

A Bosch spokeswoman said the company took the allegations seriously and is cooperating in several investigations, but declined to comment further.

The documents include records and communications between Bosch, VW and U.S. regulators. One 2011 email to the California Air Resources Board, among other communications, demonstrates "Bosch's deep understanding of what regulators allowed and would not allow, and what Bosch did to help VW obtain approval," the filing said.

"Bosch played a crucial role in the fraudulent enterprise and profited handsomely from it," the court papers say.

Bosch has not been charged with any wrongdoing. But German prosecutors said in December that they were investigating whether staff at the Stuttgart-based company were involved in the rigging of emissions tests by VW.

Bosch makes an engine control unit, often referred to as the "brain" of the engine, used by several top automakers including VW. That system controls a vehicle's acceleration and power and is extensively customized to give each car model its own unique feel.

Bosch supplied software and components to VW but has said responsibility for how software is used to regulate exhaust emissions or fuel consumption lies with carmakers.

In the court papers, the attorneys said Bosch had worked "hand-in-glove" with Volkswagen to develop a so-called cheat device to circumvent emissions tests and trick regulators.

The engine control system for VW's clean diesel engine was customized through years of close collaboration between the carmaker and Bosch, the lawyers said.

"It is inconceivable," the attorneys wrote, "that Bosch did not know that the software it was responsible for defining, developing, testing, maintaining and delivering contained an illegal defeat device."

Bosch chief executive Volkmar Denner said in January he had ordered an internal investigation and was cooperating with authorities. In April, Bosch said it had set aside 650 million euros for potential legal costs, including for an ongoing investigation into the company's role in Volkswagen's diesel emissions manipulation scandal.

Reuters reported in November that U.S. federal prosecutors were investigating whether Bosch knew or participated in VW's years-long efforts to cheat on U.S. diesel emissions tests.

In June, Deputy U.S. Attorney General Sally Yates said the VW probe is looking at "multiple companies and multiple individuals."

VW has agreed to pay up to $15.3 billion to buy back or fix 475,000 2.0 liter diesel vehicles in the United States, offset excess emissions, invest in zero emission vehicle efforts and address some state claims. It still must win approval of plans to address 85,000 polluting 3.0 liter vehicles in the United States.

Separately, a federal judge on Wednesday rejected a Virginia VW owner's request to intervene in the settlement of a class-action lawsuit against the automaker. Had the owner been successful, the move could have delayed the beginning of the buyback program, which is expected to begin in October.

(Reporting by David Shepardson and Joel Schectman; Editing by Tom Brown)

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