Volkswagen's diesel tax breaks could be a focus for U.S. prosecutors

Mon Sep 28, 2015 4:21pm EDT
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By Ayesha Rascoe and Joel Schectman

WASHINGTON (Reuters) - Volkswagen's (VOWG_p.DE: Quote) push to secure tax breaks that kick-started a market for its new diesel cars could now help U.S. investigators build a case against the automaker for deceiving the government about their emissions, lawyers said.

VW was among several automakers that lobbied the administration of George W. Bush to secure around $50 million in tax breaks under an incentive program that included the first wave of VW Jetta TDI drivers in the United States.

Around 39,500 customers bought 2009 year VW vehicles eligible for the $1,300 rebate, according to the research firm Autodata Corp.

VW's campaign to get those rebates could open a claim for civil penalties or criminal charges against the German automaker or its executives, according to lawyers who are outside both the developing U.S. investigation and the company’s response but familiar with complex public prosecutions.

VW spokeswoman Jeannine Ginivan said the company had no immediate comment.

VW said last week that it equipped 11 million of its vehicles with software that had the effect of causing the diesel cars to run cleaner during testing by regulators than they did in actual driving.

U.S. prosecutors would need to show that VW executives intentionally made fraudulent claims about their cars' emissions as part of the effort to win the tax break, the lawyers said.

Prosecutors could bring a criminal tax fraud case against VW and charge executives if authorities are able to show individuals intended to trick U.S. authorities, said Scott Michel of law firm Caplin & Drysdale.   Continued...

The logo of German carmaker Volkswagen is seen on the front grill of a Passat car in Willmette, Illinois, September 24, 2015. REUTERS/Jim Young