American Scandal

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Every scandal begins with a lie. But the truth will come out. And then comes the fallout and the outrage.

Scandals have shaped America since its founding. From business and politics to sports and society, we look on aghast as corruption, deceit and ambition bring down heroes and celebrities, politicians and moguls. And when the dust finally settles, we’re left to wonder: how did this happen? Where did they trip up, and who is to blame? From the creators of American History Tellers, Business Wars and Tides of History comes American Scandal, where we take you deep into the heart of America’s dark side to look at what drives someone to break the rules and what happens when they’re caught. Hosted by Lindsay Graham.

Volkswagen Diesel Scandal - The Defeat Device | 2

Volkswagen Diesel Scandal - The Defeat Device | 2

Tue, 04 Feb 2020 10:00

Alberto Ayala fights to get the truth from Volkswagen. But the carmaker stonewalls the government—again and again. That is, until a VW employee offers a shocking confession, and sets the course for a massive fight.

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It's May 2014. The sun has begun to set in Valsburg, Germany, casting a golden glow on a weathered brick tower. It's an imposing building, one that stood since the Second World War. It's also the most important building in Valsburg. This is the worldwide headquarters of Valswagen. On the top floor of the tower, Valswagen CEO Martin Vintricorn sits in his office. Vintricorn is at his computer, checking design proposals for a new car. He's completely focused on the task. He hasn't looked at a clock for hours. And as the sun sets, the change in light throws a harsh glare across his computer screen. Vintricorn looks up. He rises and closes the blinds. It's time to go home. Before he heads out, Vintricorn locks the drawer in his desk, securing his documents. He grabs his suit coat and folds it carefully over his arm. But right as he's leaving... Come in. The door opens. Vintricorn's secretary pauses in the entryway. She's a thin red folder tucked under her arm and quietly waits permission to step forward. Ah, yes, the deco post. I'll take that. Vico post is the informal term for Vintricorn mail. It's important information summarizing the present state of Volkswagen and he receives it every Friday. Anything urgent? Progress reports from development, travel plans for next week, and... Vintricorn senses that she's holding something back, something important. He leans forward. Yes, and? And there's a memo from Bant Gauthvice. Vintricorn frowns as he chews over this piece of information. Bant Gauthvice has made a career of putting out Volkswagen's PR fires. An unexpected memo from him is a bad sign. Vintricorn sets a folder on his desk. Hmm, thank you. You can go. With a secretary gone, Vintricorn snaps on again his desk lamp. He flips open the red folder. Vintricorn spots the memo, clearly marked, confidential. He reads it with the focus of a wartime C captain assessing his battleships damage report. It's bad news from the United States. A group of West Virginia graduate students has road tested Volkswagen's new diesel autos, and they've made a shocking discovery. The cars passed air pollution tests with flying colors, but those tests were inside government labs. Out in the real world, the results were far different. These diesel cars are emitting dangerous air pollutants in quantities far above legal limits. Now a government agency is involved. The California Air Resources Board wants all technical details about the company's diesel pollution control systems. The state agency wants to know why the diesel spews so many nitrogen oxides, and it wants to know now. But that's not the end of it. Carb, as the agency is known, is also submitting Volkswagen's diesels to further rigorous and extensive tests. Carb might decide that the cars don't comply with pollution laws, and if that's the case, it could force Volkswagen to order a recall. But that's not even the worst part. It could start asking how the cars passed government tests in the first place. Ventricorn shuts the folder. He knows that from this second forward, one false move could very well mean the end of his career. Possibly the end of Volkswagen. Gotfise was unequivocal in his advice. A thorough explanation for the dramatic increase in emissions cannot be given to the authorities, he wrote. Ventricorn agrees. Volkswagen has enemies in America. Those enemies are advancing. They could destroy everything Ventricorn has built. He knows that his company will have to be careful. It will conceal what it needs to, be cunning when it must. Ventricorn knows that there are times in life when the truth is not an option. Lots of people don't know it, but autumn is an ideal time to plant. Shorter days and cooler nights create ideal conditions for the plants to get established. 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Follow the generation wide podcast on Amazon music or wherever you listen to podcasts. From Wondry, I'm Lindsey Graham and this is American scandal. In 2008, Volkswagen introduced what appeared to be a miraculous new product. The automaker called it a clean diesel engine. Volkswagen promised that its new diesel cars would be fast and powerful, but that they would still meet the US's strict limits on air pollution. Volkswagen said these new diesels would pollute less than gas powered cars and the company believed this would appeal to environmentally conscious consumers and solidify Volkswagen's dominance in the market. But there was a problem. Volkswagen's engineers had struggled to design this new diesel engine. They couldn't find a way to maintain engine power while also keeping down air pollution. And as they struggled, they arrived at an easier solution, one that was also illegal. Five years later, a group of graduate students stumbled upon the first evidence of Volkswagen's misconduct. And soon, government regulators would fight to understand exactly what the carmaker had done. These government officials would uncover a shocking conspiracy, one that would shake the public's faith in the auto industry. This is episode two, The Defeat Device. It's the fall of 2014. It feels like summertime in Southern California, but it's not just hot outside. Inside a conference room at the California Air Resources Board, the air has also grown hot and stuffy. Alberto Ayala taps his ballpoint pen against the edge of a conference table. Ayala is the head of emissions testing, and today he's one of several carbon officials who have gathered for a meeting. Across the table sits a team of American representatives from Volkswagen. This face off has gone on for three long hours, and the mood has grown tense. politely, but firmly, Ayala once again asks Volkswagen's representatives to explain themselves. He wants to understand what's going wrong with their diesel engines. Why are the diesels polluting at levels off the charts when they're driven on the road? One Volkswagen representative shrugs. To look that says, your guess is as good as mine. Ayala issues a stern glare back. Ayala is a man who believes in precision. He keeps his mustache neatly trimmed and his head shaved. He has his faith in science, and knows there's an explanation for everything. But today, Volkswagen is not being precise. They're not offering any kind of explanation about their supposedly clean diesel engines. Ayala once again checks the clock. The meeting has dragged on and on, going nowhere. He's ready for a break, but he knows that for now, that'll have to wait. Ayala tries again to convey the urgency of the matter, and he struggles to keep his voice from rising in frustration. He reminds Volkswagen that every day this remains unresolved. Volkswagen vehicles are contributing to the increase of potentially hazardous air pollution. The stakes are high. Lies hang in the balance, and Ayala knows that it's his responsibility to make this right. He leans forward and asks if Volkswagen understands its responsibility, because a sure doesn't seem like they do. The Volkswagen representative extends his hands, offering a conciliatory gesture. His team is trying, he says. That's why they're going to leave now. They're going to run additional tests at Volkswagen's facilities. As soon as the tests are complete, hopefully they'll have an explanation. Ayala is livid. Parts of him want to physically restrain them from leaving. He wants to keep pelting them with questions, and maybe then they'll produce the satisfying answer. But Ayala reminds himself of something else. He is a scientist, and he must remain objective and methodical. Ayala also wants to give Volkswagen the benefit of the doubt. The company represents German engineering at its finest. It has been a top player in the auto industry since the 60s. Alberto Ayala is beyond frustrated, but he knows he needs to work with Volkswagen. They need to figure this out together. Finally, the meeting ends. The men and women on both sides of the table rise in shake hands. Ayala exits the conference room. He strides down the hallway to Carb's labs. Volkswagen has made promises, and they say they'll keep running their tests. But that doesn't mean he'll stop running tests of his own. Far from sunny California, it's a frigid day at Auburn Hills, Michigan. It's October 1, 2014. Oliver Schmidt stands in his office on the top floor of Volkswagen's North American headquarters. Schmidt looks out the window. He sees a pale reflection of his smooth scalp and young features. He turns away, and wonders when the first snow of the year will fall. This seems extra cold lately, but not just because of the weather. Schmidt senses that a storm is bearing down on Volkswagen. He's head of the company's environmental and engineering office, and so he knows he must do everything he can to keep the storm at bay. Schmidt also knows he's going to be tough. He's one of the few people on the planet who knows what Volkswagen has been hiding, what's really going on with the company's clean diesel engines. But Schmidt doesn't think of himself as a deceitful man. Instead, he's a loyal employee. Volkswagen is arguably the most powerful carmaker on earth. Schmidt will do whatever it takes to keep the company at the top. That might mean feeding excuses to Alberto Ayala and the California Air Resources Board were offering half truths that stole the agency. Schmidt looks over and sees a group of Volkswagen employees filing into his office. He takes a seat at his desk. He smooths his tie, puts on a smile. He needs to keep up a good facade, because Schmidt isn't sure who among them knows the truth. Alberto Ayala isn't the only problem. Any one of these employees could also take down him and Volkswagen. Schmidt's engineer and manager finish filing in, and he explains the plan for today's conference call. They'll be on the phone with Alberto Ayala and the California Air Resources Board. So let me do the talking. I know Ayala. I know how to manage him, okay? Schmidt's teammates nod their heads. He dials. This is Ayala. Alberto, it's Oliver Schmidt at Volkswagen. I'm here with my team. It's great, Oliver. My team's on the line too. Shall we go around and make introductions? We've spent enough time on this already. Let's just get down to it. Oh, of course. Perfectly understandable. Not a problem, Alberto. Not a problem. So you received our latest test results? Schmidt quickly plans his response. Yes, we did. And I'm afraid we've concluded that they must be inaccurate. Oh, yeah? Why is that? Well, with all due respect, the routes you took the cars on during your road tests, they were consistent. The changes in air pressure must have produced inaccurate results. With all due respect, that's an unacceptable answer. We all know that the performance of your engine couldn't possibly be affected this much by just air pressure. I've been in contact with the EPA, by the way. They agree. There's something wrong with your engines. Schmidt wins this. This is just what he needs. More government meddling. Ah, well, if that's the case, we'll do everything in our power to address the problem. But I've got to say, Alberto, matters like these, there are rarely quick answers. Well, I've waited six months, Oliver. Our job is to test every car manufactured by every car maker that wants to sell in California. And instead, we're spending limited time and resources on your bad engines. We're doing everything we can to find answers for you. I assure you. I want to believe that. But in the meantime, you're flooding the air with nitrogen oxides. If carb doesn't get an explanation by the end of this year, well, drastic steps may need to be taken. Schmidt's small is hard. It's a threat, and he knows what it means. California leads the nation in environmental standards. If carb revokes its certification of Volkswagen cars, then the US EPA will certainly follow. And if Volkswagen doesn't have the approval of the EPA, then the automaker can't sell its diesel cars in America. That will embarrass Volkswagen in front of the whole world and more importantly, Martin Vintercorn will miss his goals for car sales, and he'll hold Schmidt responsible. Schmidt glances at his colleagues. They look the same way he feels, scared. He takes a deep breath. He has no choice but to go to his last resort. I hear you, Alberto. Volkswagen hears you. And I believe we have a solution. Volkswagen will issue a recall, effective immediately. Every last one of our passenger diesel in America will come off the roads. We suspect a flaw in the engine software must be the cause of all this trouble. We'll update the software, and that should fix the emissions equipment. How does that sound? Yeah. It sounds expensive for you. But at this point, I think it's your only option. The call is over. Volkswagen's secret is safe for now. Schmidt loosens his tie. His shirt is damp. He turns to his associates. OK. I'll contact you by end of day with next steps. The men and women of his team shuffle out. He hears them whispering. They sound like critics heading for the exit after a bad show. His show and his bad performance, Schmidt turns back to the window. He sighs at what he sees, snowflakes hitting the cold hard ground below. It's spring in Southern California in 2015. Alberto Ayala arrives early at his office. He opens the door, hits the light switch, and shakes his head at the mess. Stacks of documents and binders teeter across his desk. They're spread among the chairs, they're even on the floor. They're full of charts, analytics, schematics, and reports. Volkswagen's so called clean diesels have completely taken over Ayala's life. He feels like one of those detectives in the movies, who's obsessed with the case. Only in this case, nothing adds up. He wonders which clue is he missing. Where will he find that one detail, that one thing that will blow open into the whole mystery? He pushes aside a pile of folders and drops into his chair. Volkswagen issued a recall of its diesels, and that should have cleared a lot of things up. The company took back all of the offending cars, nearly 300,000 of them in the US. Carb then reached out to Volkswagen with a simple, obvious question, did your software update fix the problem? Did it bring down the air pollution coming from the diesel engines? It should be an easy answer, Ayala, thanks. But incredibly, even now, Volkswagen remains evasive. First they claim that different engineers have run different tests, and they have yet to come to consensus. Another day, a Volkswagen representative says that the company realizes it made a mistake. The emissions control equipment isn't quite in the right place on all the vehicles. They're currently figuring out how to fix this. Ayala's phone rings. He picks it up. A man identifies himself as a Volkswagen engineer, one Ayala hasn't spoken to before. Upbeat and enthusiastic. The engineer says that Volkswagen has gotten to the bottom of the issue. As it turns out, the cleaned easels are actually mostly fine. They always have been. The problem, he says, is Southern California, where Carb has been running its tests. The area has unique driving conditions, compared with Michigan and the rest of the country. That explains why the easels are producing such high levels of nitrogen oxides in California. Ayala suppresses a derisive snort. This excuse is so obviously false, so obviously untrue, it's insulting. Ayala gives the engineer a quick thank you, and then hangs up without another word. This is the turning point. It's in this moment, Ayala accepts that Volkswagen will never voluntarily give him a straight answer. The company cannot be trusted, and now Ayala feels comfortable fully exploring his darkest suspicion. Volkswagen is using a defeat device. It's a tool that shuts off air pollution controls when cars are driven in the real world. The air pollution control stay active when the cars are tested in government labs. Ayala thinks back to 1993, when the EPA discovered a similar defeat device in Cadillac. It had been installed with the purpose of tricking government regulators, and when the truth came out, General Motors faced a $45 million fine. But Ayala knows that fine would look like peanuts compared to the money Volkswagen would pay, if they have indeed installed defeat devices in their diesels. Still, it is a big if. Ayala can feel the blood rushing to his head. It was supposedly clean diesels were fine when the cars were on the rollers in the lab. But then when they're on the road, Ayala shuts his eyes. He knows that Volkswagen is still innocent until proven guilty. He cannot condemn the company until he has irrefutable proof. He stands, then exits his office, and hurries down the hallway to gather his team. If Volkswagen has indeed committed a crime, he now has a good idea on how to find the smoking gun. If you're into true crime, the Generation Y podcast is essential listening. We started this podcast over 10 years ago to dissect some of the craziest and most notable murders, crimes, and conspiracy theories together, and we'd love for you to join us. Generation Y is one of the longest running true crime podcasts out there, and we are still at it, unraveling a new case every week. We break down infamous cases like the Evil Genius Bank robbery, and lesser known cases like the case of Kimberly Rico. Did she actually kill her husband after they took part in a murder mystery game? We cover every angle, breaking down theories, diving deep into forensic evidence, and interviewing those close to the case. And with over 450 episodes, there's a little something for every true crime listener. Follow the Generation Y podcast on Amazon Music, or every listen to podcasts, or you can listen ad free by joining Wondery Plus in the Wondery app. It's May 18, 2015 at Volkswagen's US headquarters in Auburn Hills, Michigan. Stuart Johnson has just returned from lunch. Johnson, a tall Volkswagen executive who works in air pollution compliance, sits down at his desk, and clicks his mouth to wake up his PC. The first thing he notices is an unread message marked urgent. He opens it. His eyes rapidly scan the screen, and he can feel his entire chest tighten in panic. Alberto Ayala has declared that CARB will step up his testing of Volkswagen diesels. As always, the CARBs will be put on laboratory rollers, but this time, the testing will go on for longer than usual, and it will follow a variety of simulated driving patterns. This is a problem, because Johnson knows that CARB's new testing pattern is certain to confuse any defeat devices. These sorts of devices tend to have one major weakness. They only kick in during standardized testing, but now CARB is done with standardized testing. They're throwing randomized elements in. That means it's closer than ever to discovering the biggest secret in the history of Volkswagen. The engineer that wrote the email seems to understand this too. And his last line is a desperate plea to Johnson. Come up with a story. Please. It's August 5, 2015. It's a sticky, overcast day in Traverse City, Michigan. Alberto Ayala makes his way through an air conditioned hotel lobby. It's here that he mingles with a crowd of auto pollution experts. Today, they're all here for a conference held by the Center for Automotive Research. Ayala has known many of the attendees for years. He stops occasionally to ask about their families, where to gather their thoughts and the latest industry developments. Several people complement Ayala on his speech this morning. He appreciates the kudos, but he barely remembers what he said. Because right now, he's distracted by a private meeting that's about to start. Ayala received the meeting request from two executives at Volkswagen. One is Oliver Schmidt, the general manager of Volkswagen's Environmental and Engineering Office. The other is Stuart Johnson, who helps Schmidt run the department. Ayala is pleased that they came to him rather than the other way around. Maybe he's finally broken through and scared them. He never said that he was hunting for a defeat device, but he did finally inform them that CARB would refuse to approve Volkswagen's 2016 models unless the diesel issue was resolved. It was a major decision, not one he came to lightly. He delivered the news over the phone. On the other end of the line, Volkswagen's executives stuttered and begged for more time, but the decision was final. At the end of the call, Ayala felt a weary satisfaction. He'd taken the upper hand, but this all could have been avoided, had they not blown them off over and over again. Now at the hotel, Ayala heads to a conference room with large windows and a view of the lake. Schmidt and Johnson are already seated. They're joined by several other Volkswagen executives. As Ayala enters, they stand to offer firm handshakes. They ask him how he's enjoying his time in Michigan. Ayala tells him it's been a great trip, and then sits down, calmly allowing VAM to take the lead. After a moment's hesitation, Stuart Johnson slides a heavy binder across the veneer table. He promises that the information within will answer all of Ayala's questions. Ayala gives a noncommittal nod. He opens the binder and goes over a couple pages. Their dance with technical jargon and complex diagrams. At first glance, this information looks thorough. Ayala has an engineering PhD, and the documents look credible to his eye. He feels excited. Finally, he's holding some answers. Finally, he might be able to let go of his suspicions and move on with his life. The binder is as thick as a phone book, so Ayala can only peruse it here. He says he'll get this to his team back at carb and they'll spend the next couple of days pouring over the information. When they're done, they'll inform Volkswagen of their conclusions. Schmidt nods vigorously and says he hopes the binder will clear up any confusion. He smiles broadly. But Johnson doesn't. Johnson even seems icy, guarded. That's strange Ayala thinks. But he only has a second to consider the contrast because he's already late for another conference fent. Ayala thanks the Volkswagen team for their time. He lifts the heavy binder and heads back toward the buzz at the hotel lobby. One week later, Ayala's back in Southern California. He's perched behind his desk at carb, flipping through his calendar when there's a knock at the door. Two of his most trusted engineers enter, one with the Volkswagen binder under her arm. With one look at their faces, Ayala can tell that there is a serious problem. Yasthen is sit down. The engineer with the binder sets it on Ayala's desk, lands with a small thud. Both engineers start talking at once. They've read every page in the binder and none of it makes sense. On the surface, of course, it does. But give it a deeper analysis and the documents don't add up. There's no question. The binder is an unabashed attempt to deceive carb. Ayala cooly processes the information. The news is painful, but at this point, not surprising. Ayala clears his throat, then takes a moment to sit and collect his thoughts. Inside, he might explode, but he contains himself. These engineers are just the messengers. He'll save his rage for the moment when he comes face to face with someone from Volkswagen. Ayala pushes back, takes deep breath. He asks his engineers why they believe Volkswagen would hand him a binder full of lies. The woman who brought the binder says there is only one explanation. The automaker is using a defeat device. The room is quiet for several moments. Then Ayala thanks the engineers for their analysis and he outlines what will happen next. One of the most important car makers in the world may be involved in a criminal conspiracy and carb must shift into a whole new gear. For now, carb will continue to withhold certification on all incoming Volkswagen vehicles. The company can keep lying, but it's going to cost them millions of dollars a day. Volkswagen can choose that path or they can come clean. It's August 18th, 2015 in Pacific Grove, California. Just outside the Assyllamar Conference Center, Volkswagen executive Stuart Johnson stands nervously, tugging at the hair on the side of his head. It's gotten thinner and grayer and it feels like that's just been in the last week. Johnson is here for a transportation conference, but that's not why he's waiting in this occluded courtyard. He looks up and takes a few deep breaths. There are pine groves off in the distance. And far beyond that, Pacific Ocean crashes upon sand dunes. It's truly beautiful here on the Monterey Peninsula. Johnson wishes he could appreciate it, but that's on the question. In several moments, he is going to upend his own life in the lives of many others. Johnson is about to make a confession. He feels he does not have a choice. Carb and the EPA have closed America for business and they want more Volkswagen's to test. Everything is about to blow up. So now Johnson thinks the only choice is for Volkswagen to get out in front of this. Maybe he can save himself in the process. Alberto Ayala marches towards Johnson, his eyes already narrowing. Johnson doesn't offer his hand. He knows Ayala wouldn't take it. All right, Stuart. Here we are. You said you wanted to talk about the binder. What do you have to say? This whole thing has gone on too long. Yeah, I'll say. Giving me that binder in Michigan full of nonsense, embarrassing me, I never wanted to embarrass you. I don't care what excuses you give or how many phony documents he hand over. I revoke to your certification. Your 2016's are stuck in the ports and that's the way it's going to stay. I know Alberto, believe me, believe you. That's funny. I think we're done here. Ayala begins to walk away. Johnson calls after him. Alberto, my boss has ordered me not to talk to you, okay? Ayala stops midstep. It turns back to face Johnson. Talk to me about what? Johnson gulps hard, then looks at the ground. He can't meet Ayala's eyes. Cleaned easels. They're fake. They're not clean. They never have been. We've been using defeat devices since 2009. We put special code in the engines. When you're running your test, the emission controls turn on. When the tests are over, the controls turn right back off. Johnson watches Ayala's face redden. The government regulator clenches his fist. For a moment, Johnson worries that Ayala is going to hit him. I gave Volkswagen the benefit of the doubt for a year. I know. I know. A year. You lied to me, to everyone. Everyone out there with one year of cars. Do you have any idea what's going to happen to you and Volkswagen? I'm so sorry, Alberto. I got out of hand. I started in Germany and Johnson trails off. Ayala just stands there, shaking his head, gannin again. Johnson is miserable, but he feels a burden has been lifted. Finally, it's out in the open. After years of pursuing success at all costs in order to please Vulsburg. What happens next, Alberto? What happens next is you tell the EPA exactly what you just told me. If you don't, I will. And then you go get yourself a very expensive lawyer and hope to God he can keep you out of prison. Goodbye, Stewart. With that, Ayala walks away. Johnson stares into the distance, thinking about his future. He feels alone and lost. For years, his life has been tethered to Vulswagen. He wanted nothing more than to be successful in the company. The company he believed in. Something profound has changed. He can feel it. He's lost his faith in Vulswagen. And this company, which he gave his life to, Ayala is going to bring it down. And Johnson will fall with it. It's September 3rd, 2015. Oliver Schmidt walks toward the front doors of the California Air Resources Board in Southern California. Behind him, with a sheepish look on his face, is Stewart Johnson. Several other Vulswagen executives follow. It's cloudy and gray, fitting weather for what Schmidt must do today. As he nears the entrance to the government building, he reminds himself that this situation is unpleasant, but not unmanageable. He'll take the lead here as he's done many times before. With a little lock, maybe he can lessen the beating Vulswagen will face when it eventually is taken to court. The Vulswagen delegation heads inside and gathers around a conference table, along with Alberto Ayala. Schmidt notices that Ayala is glaring at him. The table is quiet. Schmidt isn't sure who should speak first. He doesn't want to drag this out any longer than necessary, so he starts talking. He tells Ayala and his car engineers what they want to hear. Yes, what Johnson told Ayala was true. Vulswagen used to feat devices in its diesel engines. How did they work, Ayala asks. Schmidt explains that the engines have software hidden within them. This software has a secret function called testing mode. When the software senses the car is on rollers, it commands the engine to generate a liquid solution that lowers nitrogen oxide levels. But when the car is actually on the road, testing mode switches off, and nitrogen oxide emissions rise. Ayala utters a single word. Why? For the first time all morning, Schmidt doesn't meet Ayala's gaze. He explains the reason. The cheat was the only way to manufacture diesel passenger cars without compromising vehicle design, performance, and engine lifespan. It was the only way Vulswagen could succeed. Schmidt knows he has just officially admitted that Vulswagen is guilty of criminal wrongdoing. But he and Vulswagen's most senior leaders knew there was really no other option. Not after Johnson made his confession. And even if Johnson hadn't confessed, it was only a matter of time before a car found the illegal code. Schmidt watches as Ayala jots down more notes. Now is his chance to pivot. Vulswagen did a bad thing, Schmidt says. No one can deny that. But the company has admitted fault, and it's time to pay the fine and move on. Vulswagen is prepared to cough up millions, hundreds of millions. There's no reason an amicable settlement can't be reached quickly, inquiantly. Schmidt adds that they will also do another recall. They'll fix the cars, remove the illegal code. Schmidt finishes by saying, I apologize on behalf of Vulswagen. Then he awaits Ayala's response. Ayala looks directly at Schmidt, then Johnson, then back at Schmidt again. He asks if the two executives knew about the defeat device when they gave him the thick binder of technical documents back in Michigan. Johnson says nothing, stairs blankly at the floor. Schmidt clears his throat, and in his steadiest voice confirms that yes, he didn't know about the defeat device during that meeting with Ayala. But he quickly adds, responsibility lies with a small, rogue group of engineers, employees that he hasn't been able to identify. They're the ones who install the software. They did so without his knowledge or the knowledge of any other top executive. Ayala gives Schmidt another long stare, then returns to his notes. In an offhand way, he replies that he doesn't buy Schmidt's theory about rogue engineers. He thinks that the top executives have known about the defeat device since the beginning. And he adds, the company's chances at a quiet and amicable settlement went up and smoke a long time ago. It's September 18, 2015, and Cynthia Giles double checks that her notes are in order. Giles is the assistant administrator for the EPA's Office of Enforcement and Compliance Assurance in Washington, D.C. She considers herself a seasoned professional and has nearly 30 years of experience in the field of environmental policy. Her graying hair is swept back. Giles leans forward to review the bullet points in preparation for the day's conference call. Giles was shocked when informed weeks ago of Volkswagen's official confession to the California Air Resources Board. In response, Giles is vowed to do her part and ensure that Volkswagen is brought to justice. The EPA has tasked Giles with informing the media of Volkswagen's misconduct. She clicks on her office speaker phone and greets the reporters awaiting her remarks. Go afternoon, everyone. I know you all covered the auto industry and your respective papers, so I'm going to get straight to the point. The EPA has discovered that Volkswagen used a defeat device in its diesel fuel passenger cars. It did so to violate emission standards. Volkswagen then admitted to cover up and was caught in the act. I'll take questions, but wanted to type this. We believe that this has been going on since 2009, possibly longer. And the defeat device was some kind of what? Computer chip? It was software based, a code that activated what the company has referred to as testing mode. Has the Obama administration ordered a recall? Yes, we estimate roughly half a million vehicles will be involved. How did they get away with this for so many years? They got away with it by lying to us for years. Volkswagen willfully provided false information to government officials. We will prosecute Volkswagen to the fullest extent of the law. Their conduct was not only dishonest but reckless. Volkswagen's diesel has produced exhaust rife with nitrogen oxides at levels far beyond legal limits. Can you make any further comments? Well, obviously, we at the EPA expected more from Volkswagen. The company threatened public health in America and abroad, and it must be held accountable. Has there been any response from company headquarters in Volsburg? As of today, no. Giles continues to answer questions on and on, but she doesn't mind. Volkswagen, she believes, committed one of the most significant acts of corporate corruption in modern times. The public needs to know the full truth. But she thinks that question about Volsburg was interesting. She wonders what Martin Vintercorn is doing right now. It's not a surprise he's refused to answer the EPA's calls. Several days later and 4,000 miles away, Vintercorn takes the stage of the international motor show in Frankfurt. For people at the top of the car business, the Frankfurt Motor Show is the Oscars and the World Cup rolled into one. It's epic, glamorous, a nonstop celebration of the industry's achievements. And for a powerful auto executive light, Vintercorn, it's a chance to publicly flex his dominance. But not tonight. Tonight, Vintercorn feels subdued. The American EPA has publicly announced that Volkswagen used a defeat device. Vintercorn knows that he is now a central figure in a major scandal, a scandal that's doing catastrophic damage to his carefully cultivated reputation. People are staring at him angrily and whisper as he walks past. As he steps up to the microphone, Vintercorn understands that he's supposed to just ignore the scandal. He hasn't been implicated yet. And even if he is eventually, he'll fight the charges and most likely he'll win. And he hates that it's come to this. Volkswagen's sales are stronger than ever and tonight, Vintercorn is supposed to boast about that. But he doesn't feel like boasting. He speaks in a flat voice and lists Volkswagen's plans for the future. Hybrid cars, electric cars, self driving cars. He tries to avoid the word diesel at all costs. That word is a relic of a bygone era. His speech finished, he descends from the podium to a smattering of polite applause. Vintercorn is ready to go home. It's time to gather his consultants and lawyers. He needs to make plans for the massive legal battle to come. This is not Martin Vintercorn's first fight, but he does know he may very well be his last. Next, on American scandal, embroiled in controversy and facing multiple lawsuits, Volkswagen prepares to defend itself in court. The company remains in jeopardy, and so Martin Vintercorn is forced to make a difficult choice. From Wondry, this is American scandal. Just a quick note about our reenactments. We can't always know exactly what was said, but everything in our show is based on historical research. American scandal is hosted, edited and executed, produced by me, Lindsey Graham, for partnership, sound designed by Derek Barons. This episode is written by Hannibal Diaz, edited by Christina Malsberger, produced by Gabe Riven. American producers are Stephanie Jenns, Jenny Lauer Beckman, and are nonlopes for Wondry.