Robert Bosch Probed by Fraud Investigators

Car4German prosecutors are investigating employees at Robert Bosch GmbH in connection with Volkswagen AG’s emissions fraud, expanding their probe beyond the German car
maker to one of its key suppliers.

The probe of employees at Stuttgart-based Bosch, one of the world’s biggest auto suppliers, is the first acknowledged investigation of a supplier in connection with
the Volkswagen emissions crisis. Prosecutors in Stuttgart said their investigation is at an early stage and targets unidentified Bosch employees who assisted in
installing engine control software as part of a routine contract. No Bosch employee has been charged with wrongdoing.

“In the wake of the emissions scandal, it became clear that Volkswagen didn’t itself develop the software. It became obvious which company came into question, and we
decided to take a closer look,” said Claudia Krauth, a spokeswoman for the Stuttgart prosecutor’s office. Ms. Krauth declined to elaborate. Under German law, companies
can’t be held liable for criminal wrongdoing. Instead, prosecutors must investigate individual employees suspected of being responsible. “Bosch is fully cooperating
with authorities, assisting them in clarifying the facts concerning the exhaust-gas treatment issue,” said Rene Ziegler, a Bosch spokesman, declining to comment on
specifics of the prosecutors’ investigation. The part supplier previously said it provided two components for exhaust treatments used in Volkswagen models involved in
the emissions scandal, but has said it isn’t responsible for how the parts are integrated into vehicles.

Bosch has said that it delivered the parts to Volkswagen according to the auto maker’s specifications. “How these components are calibrated and integrated into
complete vehicle systems is fundamentally the responsibility of each auto maker,” Bosch said. German weekly newspaper Bild am Sonntag reported on Sept. 27 that Bosch
warned Volkswagen in a letter in 2007 that the car maker’s intended use of the software provided by Bosch could be illegal. Bild didn’t provide a source for its
information. Ms. Krauth, spokeswoman for the Stuttgart prosecutor, said media reports played a role in prompting the investigation of Bosch employees, but wouldn’t
confirm the letter nor elaborate on the role of the Bild report.

Volkswagen’s emissions fraud was first disclosed by the U.S. Environmental Protection Agency on Sept. 18. The EPA said Volkswagen installed so-called “defeat devices”
on nearly 500,000 diesel-powered cars in the U.S. The admission sparked criminal investigations in the U.S. and Europe and an onslaught of class-action suits.
One civil suit, filed in the U.S. District Court in Detroit earlier this month, accused Bosch of assisting Volkswagen in committing civil fraud and racketeering,
according to the 56-page court filing. “Volkswagen’s fraudulent scheme was facilitated and aided by defendant Bosch, which created the software used in Volkswagen’s
defeat device,” the? suit states, adding that “Bosch’s ‘hear-no-evil, see-no-evil’ rationale” couldn’t shield the company from prosecution. Mr. Ziegler, the Bosch
spokesman, declined to comment, but said the company takes this and other class-action suits in the U.S. seriously.

In Brussels, the European Union’s antifraud office, known as OLAF, said Wednesday it had launched a probe into Volkswagen related to its diesel crisis, but declined to
elaborate. OLAF is in charge of investigating suspected misappropriation of EU funds and serious misconduct in EU institutions. “We are surprised that the agency would
go public with this without first informing the affected party,” said Eric Felber, a Volkswagen spokesman. “Volkswagen has been engaged for months in confidential
talks with the European Investment Bank. We have disclosed how these loans were used.” The European Investment Bank, the EU’s developing bank, already started
investigating several weeks ago Volkswagen’s use of some €4.5 billion ($4.9 billion) in loans received since 1990, an EIB official said. Of those, around €1.9 billion
still need to be repaid by Volkswagen, the official said. The European Bank for Reconstruction and Development, which supports projects in the EU and its neighborhood,
said it had put on hold a planned €300 million loan to help Volkswagen build a car plant in Wrzesnia, Poland. A spokesman for the EBRD declined to give a reason for
the bank’s decision. Separately, Volkswagen said it had begun making preparations for a recall and repair of some 2.4 million vehicles with tainted software in
Germany.

The company has received preliminary approval from Germany’s Federal Motor Vehicle Agency for a procedure to repair 1.2-liter, 1.6-liter and 2.0-liter EA 189 diesel
engines affected by the cheating software. Volkswagen officials have said that a software update would be installed, requiring about 30 minutes, on 1.2-liter and 2.0-
liter engines. For 1.6 liter engines, the repair will involve a software update and a simple hardware fix that alters the air flow to enhance emissions reduction,
taking about one hour to complete, Volkswagen said.
Volkswagen said in a statement Wednesday that the fix for cars in Europe doesn’t apply to the tainted vehicles in the U.S. Volkswagen and Audi technicians are in talks
with U.S. environmental authorities this week to determine how to fix U.S. vehicles affected by the cheating software.