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Renault denies charges of pollution cheating software in cars

This file photo in Saint-Herblain, western France, shows the logo of carmaker Renault on flags. Photograph: (AFP)

AFP Paris, France Mar 17, 2017, 12.56 PM (IST)

Fraud investigators accused Renault of having cheated on pollution tests for diesel and petrol engines for over 25 years with the knowledge of top management. "The entire chain of management" up to the French firm's chief executive Carlos Ghosn was implicated in the "fraudulent strategies", according to a report by anti-fraud agents which was seen by AFP Wednesday.

Reportedly, the carmaker's two models - Renault Captur and the Clio IV - pollute more than 300 per cent higher than the set legal limit in real-life conditions.

Renault is part-owned by the French government, which holds just under 20 per cent in the carmaker.

Renault shares sank 3.4 per cent on the Paris stock exchange to close at 79.45 euros, having fallen by more than four per cent at one point. This added to the previous day's 3.7 per cent drop.

"This is huge for the carmaker," said one Paris-based analyst. Shares in fellow French manufacturer Peugeot were also down, by a much more modest 0.9 per cent, in an overall firmer market.

Renault categorically denied the accusations.

'Renault doesn't cheat'

"Renault doesn't cheat," Thierry Bollore, the French company's second-in-command told AFP by telephone late on Wednesday, saying all its cars complied with legal standards.

In a separate statement released on Thursday, Renault said "none of its services has breached European or national regulations related to vehicle homologations", or certification, and that it would fully cooperate with an official investigation launched in January.

"Renault vehicles are not equipped with cheating software affecting anti-pollution systems," it said.

The fraud squad report said there was no evidence of Ghosn having charged anybody else with approving the company's emissions control decisions, which therefore ultimately came under "his responsibility".

"Many vehicles" were fitted with the device which allowed cars under testing to appear cleaner than they were on the road, the report said.

Remember Volkswagen?

The accusations against Renault come after Europe's biggest carmaker, Volkswagen, admitted to fitting 11 million cars with devices allowing them to fool emission tests.

In January, Volkswagen agreed to plead guilty and pay $4.3 billion in criminal and civil fines to settle charges that it defrauded the United States and conspired to violate the Clean Air Act.

This added to the $17.5 billion that the company already agreed to pay in settlements with car owners and dealers for environmental cleanup.

Renault would not likely face a similar scenario, as it sells no cars in the United States.

Volkswagen lost nearly half of its market capitalisation when the emissions scandal escalated, noted David Cheetham at London-based brokerage XTB.

While such a meltdown was "improbable" in Renault's case, the French carmaker still has reason to worry about the reaction of investors, he said.

"Even though the stock is lower by around eight percent in recent sessions there could be more downside ahead," Cheetham said.

Potential fines of billions

France started investigating after some of Renault's models, along with those from other carmakers, were found to spew out too many harmful emissions in random tests under real-world conditions last summer.

Experts running the probe said they could not rule out other carmakers besides Volkswagen using cheating devices in test conditions.

Anti-fraud detectives then got on the case, leading to the latest report.

According to French consumer law, proof of fraud could lead to fines for Renault of up to 3.58 billion euros ($3.84 billion), the report said. This is, incidentally, almost exactly the size of the company's net profit in 2016.
Investigations are also ongoing in other countries.

State prosecutors in southern Germany said they had searched offices belonging to carmaker Audi over parent company Volkswagen's cheating scandal.

Investigators from Bavaria, Baden-Wuerttemberg and Lower Saxony states searched "sites belonging to Audi AG and seven other locations" on suspicion of "fraud and illegal advertising", Munich prosecutors said in a statement.
In January, Fiat Chrysler also came under fire when US authorities accused it of cheating emissions tests on diesel trucks and SUVs.


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