Merkel Says She Learned About VW Diesel Cheating From the Media

(Bloomberg) -- Chancellor Angela Merkel said she learned of Volkswagen AG's cheating on diesel emissions the day after the U.S. government disclosed it and later told then-CEO Martin Winterkorn that VW had put the German car industry's reputation at risk.

Merkel testified for more than two hours on Wednesday before German lawmakers probing government oversight leading up to the scandal, which triggered the worst crisis in VW's history. The carmaker increased provisions for the scandal last month to a total 22.6 billion euros ($23.9 billion) to reflect a settlement related to larger diesel engines and a criminal plea in the U.S.

“I learned of the allegations against VW from the media” on Sept. 19, 2015, a day after the U.S. Environmental Protection Agency went public, Merkel told the investigating committee in Berlin. “I explicitly reject describing this incident as a gigantic scandal.”

The chancellor said she spoke with Winterkorn by phone on Sept. 22 and told him the scandal was “regrettable” for the entire German car industry. At the same time, she told lawmakers, it would be wrong to vilify automakers in general since they provide many jobs.

Merkel was also asked about video testimony by Mary Nichols, head of California's Air Resources Board, which was key to exposing VW's scheme to rig its diesel cars to cheat on tests for nitrogen-oxide emissions.

Schwarzenegger Meeting

Nichols told the committee on Monday that she attended a meeting with Merkel and then-Governor Arnold Schwarzenegger in Beverly Hills in April 2010 where the German leader talked about the impact of California's anti-pollution rules on German carmakers.

Merkel, a physicist by training who served as German environment minister during the 1990s, said that while she doesn't remember details of the conversation, she could imagine having discussed ways to lower carbon-dioxide emissions because she believed that German cars would be well-placed to meet more stringent California rules in the years ahead.

Merkel was the last witness called in the inquiry, which began in July and is concluding six months before national elections in which the chancellor is seeking a fourth term.

--With assistance from Chris Reiter

To contact the reporter on this story: Birgit Jennen in Berlin at bjennen1@bloomberg.net.

To contact the editors responsible for this story: Alan Crawford at acrawford6@bloomberg.net, Tony Czuczka