Fiat Chrysler Faces U.S. Criminal Emissions Investigationby and
Justice Department probe comes alongside EPA software action
Automaker already under criminal probe for sales practices
Fiat Chrysler Automobiles NV is under investigation by the U.S. Justice Department over its alleged failure to disclose software that violated emissions standards, according to people familiar with the matter, another legal hurdle for a company already under criminal scrutiny for its sales practices.
The possibility of a criminal action over diesel emissions violations comes after the Environmental Protection Agency said on Thursday it found software in 104,000 Jeep Grand Cherokees and Ram 1500s that allowed the automaker to exceed pollution limits on the road. The criminal investigation shows the U.S. is pressing ahead on cases of alleged efforts to rig emissions testing in the waning days of the Obama administration. It isn’t clear where the inquiry stands.
The Fiat Chrysler scrutiny follows revelations of cheating and conspiracy that has cost Volkswagen AG more than $20 billion. Fiat Chrysler used technology from Germany’s Robert Bosch GmbH, which is also under investigation for its role in providing software to VW. Bloomberg News reported in September that prosecutors were looking into whether Bosch software was being used by automakers in addition to VW to skirt environmental standards.
“As we confirmed yesterday, FCA has been in an active dialogue with the EPA and their U.S. Department of Justice counterparts for several months and we will continue to fully cooperate with their ongoing investigation," Fiat said in an e-mailed statement.
Bosch spokeswoman Rene Ziegler declined to comment on Fiat and said Bosch is "in constructive cooperation with the U.S. authorities."
Fiat Chrysler’s U.S. shares fell 2.2 percent to $9.73 in New York.
The U.S. investigation of Fiat Chrysler involves fewer vehicles than VW, said one of the people, who asked not to be named because the probe is confidential. The U.S. case against VW, which led to criminal charges and $4.3 billion in penalties earlier this week, centered on VW employees’ efforts to design a system that would evade U.S. environmental testing and then conspired to cover up its use when regulators began asking about it.
Fiat Chrysler’s Chief Executive Officer Sergio Marchionne said Thursday during a call with reporters the matter "has nothing to do" with VW. He said the software wasn’t intended to bypass emissions tests or operate differently in evaluation than in real-world use, calling such allegations “absolute nonsense.”
"We are confident that no one at FCA committed any fraud or tried not to be compliant," Marchionne said. "We may be technically deficient but not immoral. We never installed any defeat device."
Marchionne told the reporters he presumed the Justice Department was also investigating.
Peter Carr, a Justice Department spokesman, declined to comment.
Emissions charges may result in penalties as high as $4.6 billion -- based on the EPA’s estimate for the possible fine per car. Marchionne said Fiat could sustain a fine of that amount, though he "hopes" not to make any provisions for the case. He also confirmed the carmaker’s 2018 profit targets and reiterated Fiat has over 50 percent chances of meeting them.
Senator Bill Nelson, a Florida Democrat, called on the Federal Trade Commission Friday to investigate whether Fiat Chrysler misled consumers by marketing its vehicles as "EcoDiesels." The FTC sued VW in March for deceiving consumers by promoting its cars as clean diesels. VW settled that case in a $14.7 billion settlement with U.S. and state authorities in June.
The Justice Department last year began investigating whether Fiat Chrysler committed securities fraud over allegations that that the company inflated its U.S. car sales by paying dealers to report selling more vehicles than they actually did. The U.S. Securities and Exchange Commission is also investigating the automaker’s sales practices.