Volkswagen's U.S. head: individuals engineered emissions cheating

By David Morgan and Timothy Gardner

WASHINGTON (Reuters) - Volkswagen's cheating on emissions with the use of software in diesel cars was not a corporate decision, but something that "individuals did," its U.S. chief executive told lawmakers on Thursday.

Michael Horn, Volkswagen's U.S. president and chief executive, testified under oath to the House of Representatives Oversight and Investigations panel about the emissions scandal that has wiped away more than a third of the company's market value and sent tremors through the global auto industry.

"This was a couple of software engineers who put this in for whatever reason," Horn said about the software code called defeat devices, which the company put in diesel cars since 2009 to cheat government tests of emissions harmful to human health.

"Some people have made the wrong decisions in order to get away with something that will have to be found out," Horn said

when asked by lawmakers on the panel if Volkswagen cheated with defeat devices because it was cheaper than using existing technology that can cut emissions.

Volkswagen has suspended 10 senior managers, including three top engineers, as part of its internal investigation. The inquiry has found employees began to install defeat devices after realizing a costly new engine would fail U.S. emissions standards, according to sources. Company investigators have found no evidence against the engineers.

Horn on Thursday admitted that Volkswagen, even after hearing in the spring of 2014 about an independent study that showed emissions irregularities in two of its diesel cars, told U.S. air regulators that the higher emissions data was the result of technical problems with the tests.

The company told regulators only on Sept. 3 that it was using defeat devices in diesel cars since the 2009 models, Horn said.

"Now we learn you knew some 18 months ago," said Representative Fred Upton, a Michigan Republican, about Volkswagen learning about the study by the International Council on Clean Transportation and West Virginia University. "What did you really do to fix it and come clean, versus simply going along? But ultimately, the saying rings true: cheaters never prosper."

Horn said he had "no understanding" of what defeat devices were and only learned of them at a meeting in September that Volkswagen held with U.S. and California air regulators.

Horn, sitting alone before the committee with folded hands and a furrowed brow, apologized to lawmakers for Volkswagen's use of a defeat device, and pledged to cooperate with the committee. But he offered little new, saying the company's external investigation remains at a preliminary stage.

The scandal is the biggest business crisis in Volkswagen's 78-year history, and it forced the ouster of long-time CEO Martin Winterkorn.

(Editing by Matthew Lewis)