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Volkswagen blames emissions scandal on a 'mindset' that tolerated cheating

Automaker says technical fixes will roll out in Europe next month

Volkswagen today presented the preliminary findings of an internal investigation into its sprawling diesel emissions scandal, outlining the systematic factors that fueled the scandal and providing new details on how technical fixes will be implemented.

At a press conference at its Wolfsburg, Germany headquarters Thursday morning, Volkswagen blamed the scandal on three main factors: individual misconduct, flawed internal policies, and a "mindset" in some parts of the company that tolerated cheating. Volkswagen CEO Matthias Müller added that the company has developed a "robust" solution to fix the software in cars with EA 189 engines, and that the recall process in Europe will begin next month. VW will contact European car owners to notify them of the fix, though addressing the problem in the US will take longer due to more stringent emissions requirements, Müller said.

"we need the courage to be more honest."

The German automaker has been embroiled in scandal since September, when the US Environmental Protection Agency (EPA) revealed that special software installed in 11 million VW diesel cars allowed them to cheat on emissions testing. The company faces criminal probes from the US Justice Department and European regulators, and is expected to lose tens of billions of dollars due to the scandal.

Hans Dieter Pötsch, chairman of Volkswagen AG's supervisory board, said the company will implement new IT systems to flag individual misconduct, and that future emissions testing will be verified by independent third parties. He added that the cheating software was installed because engineers could not find a way to meet US standards on nitrogen oxide emissions "within the required timeframe and budget."

"When it comes to thresholds, we need the courage to be more honest," Pötsch told reporters. "The growing industry-wide discrepancies between official emissions data and real-life levels are no longer acceptable. We need to break new ground here."

VW's recall process will begin in Europe with 2-liter engines, which can be fixed with a software update. Cars with 1.6-liter engines will need a "flow transformer" to be installed. Müller said the process could go on for all of next year.

VW also addressed more recent suspicions that more than 800,000 of its cars were giving false carbon dioxide emissions readings. One of its engineers flagged the issue in November, but on Wednesday the company said that internal investigations showed that the issue only affected about 36,000 cars, covering nine different models. VW added that the discrepancies were minor, and not the result of illegal tampering.

"We are not talking about a one-off mistake, but a whole chain of mistakes."

An external investigation to identify the employees responsible for installing the emissions cheating software is ongoing, and will likely extend well into 2016. Nine managers have been suspended so far, and more suspensions may be forthcoming, the company said Thursday. Jones Day, the US law firm hired to oversee the investigation, has so far collected 102 terabytes of data from employees, and around 2,000 employees have been ordered to not destroy emails and other data as the probe continues.

Pötsch said there are so far "no indications" that top-level executives or board members were aware of the cheating software, attributing the activity to a "relatively small group of people" who "acted irresponsibly." Yet he admitted that systemic flaws allowed the cheating to persist. "We are not talking about a one-off mistake, but a whole chain of mistakes," he said.