U.S. prosecutors charge FCA engineer with manipulating diesel emissions

DETROIT – Federal prosecutors on Tuesday expanded a criminal investigation of the auto industry by charging a Fiat Chrysler engineer with rigging pollution tests on more than 100,000 diesel pickup trucks and SUVs sold in the U.S., the first indictment since a wave of similar cases against Volkswagen and its managers.

The alleged scheme involving Emanuele Palma isn’t as large as the Volkswagen emissions scandal, which involved nearly 600,000 vehicles. But the charges show that investigators are still on the case, months after Fiat Chrysler agreed to a $650 million civil settlement and said it would fix Jeep Grand Cherokees and Ram 1500 trucks with “EcoDiesel” engines made between 2014 and 2016.

Palma is charged with conspiracy, violations of the federal Clean Air Act, wire fraud and making false statements.

Prosecutors allege that he manipulated software to make the pollution control system perform differently under government testing than during regular driving. An expert said the mention of co-conspirators in Palma’s indictment suggests more people could be charged.

“As a result of his engineering decisions, his management, his lies, these vehicles on the road emitted dramatically higher pollutants than were allowed by law,” Assistant U.S. Attorney Timothy Wyse told a judge in U.S. District Court in Detroit.

U.S. Magistrate Judge Elizabeth Stafford rejected Wyse’s request that Palma, a native of Italy who still works at Fiat Chrysler, wear an electronic monitoring device while he’s free on bond.

“We intend to defend this very vigorously,” defence lawyer Ken Mogill said.

Fiat Chrysler released a brief statement, saying it continues to co-operate with investigators. The automaker in January agreed to a settlement with U.S. and California regulators, although the deal didn’t resolve any potential criminal liability.

“We acknowledge that this has created uncertainty for our customers, and we believe this resolution will maintain their trust in us,” Mark Chernoby, the company’s head of North American safety and regulatory compliance, said at the time.

When allegations against Fiat Chrysler first surfaced in 2017, then-chief executive Sergio Marchionne said it was unfair even to try to make a comparison to Volkswagen.

“There’s not a guy in this house that would even remotely attempt to try something as stupid as that,” he said of cheating. “And if I found a guy like that, I would have hung him on a door.”

Marchionne died in July 2018. The case against Palma shows the government has a different opinion.

“Either people were disobeying leadership or leadership knew about it and lied,” said Bruce Huber, a professor at Notre Dame law school. “Either way it’s not going to reflect positively on either the corporate culture or management efficacy.”

Volkswagen in 2017 pleaded guilty and agreed to pay $4.3 billion in U.S. civil and criminal penalties on top of billions more to buy back cars. Two people were sent to prison. Charges are pending in Detroit against others at VW or Audi, but they are in Germany and out of reach of U.S. authorities

Meanwhile, prosecutors in Germany on Tuesday charged VW’s chief executive, chairman and former chief executive with stock manipulation for not telling investors in 2015 that the scandal was about to break.
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