Rigged Tests Haunt Volkswagen After A Decade

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Volkswagen

Norwegian shipowner, I.M. Skaugen  is seeking a $50 million compensation from a marine unit of Volkswagen (VOWG_p.DE) for rigging performance tests of ship engines produced over a decade ago from MAN.  MAN has supplied the engines to Skaugen in 2002-03 and has legal counterclaims over contracts with Skaugen. VW first acquired a stake of 22 percent in MAN in 2006, 55 percent stake in MAN in 2011 and now owns 75 percent.

I.M. Skaugen alleges that MAN had provided misleading specifications for the six engines bought from MAN and so, it is seeking compensation for higher fuel use than specified over the expected 30-year lifetimes of the underperforming engines.

I.M. Skaugen has filed a $20 million demand (which may be revised $50 million) in a Singapore court in July 2015.  MAN when contacted in 2012 promised transparency and whatever they could do to settle the issues.  The method being applied and the software in fuel consumption or emissions seemed to  conceal the fact that these engines do not meet the promised standards.

In 2001, MAN admitted that some of its factory tests of four-stroke marine diesel engines may have been rigged to show artificially low fuel use.  A MAN spokesman said the company has worked to compensate clients since but has not published a list of those affected and has been unable to settle with I.M. Skaugen.

MAN’s negotiation for ‘out-of-court settlement for several months collapsed when MAN withdrew support for its chief negotiator.  Mueller added that MAN also has “substantial outstanding claims” against Skaugen linked to “different supply contracts.” Skaugen said MAN’s biggest demand is for 10.5 million euros ($11.93 million) in damages from I.M. Skaugen in the Danish Institute of Arbitration for failure to accept two other engines it had ordered.

Skaugen said about the underperformance of the other four triggered cancellation.  In 2013, an Augsburg court fined MAN 8.2 million euros for violating laws with the misleading test results of dozens of marine diesel engines, including those sold to Skaugen.  Software in the factory computers allowed displays to show lower fuel consumption than in reality, the court said.  After this court observations, Mueller said that the company has overhauled the tests and done everything possible to settle disputes.

Source: Reuters

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