Another Volkswagen employee was arrested in the United States in conjunction with the VW emissions-testing scandal. According to one report, Oliver Schmidt, a Volkswagen AG executive, was arrested on Saturday in Miami and was charged in connection with the German auto giant’s emissions-cheating scandal. He is the second person arrested and charged participating in a broad conspiracy to defraud the U.S. government and Volkswagen customers. Allegations indicate that Schmidt was not only well aware of the existence of the defeat devices in VW automobiles sold in the United States but that also he actively worked to deceive U.S. regulators.

If these allegations prove to be true, it could well be very damning for the executive level at VW. While there still is the lack of prosecution of executives or others domiciled in Germany, The Man From FCPA would certainly expect the U.S. executive team to have lawyering up in a very big way about now. Moreover, since it is unlikely Germany will allow any extraditions of German nationals, the U.S. law enforcement effort will likely be restricted to VW executives based in the United States. However, if VW executives, who are German citizens, travel through countries more amenable to U.S. extradition they may find themselves whisked off to face a judge in America.

The broader question is whether VW will actively assist U.S. law enforcement authorities in performing a substantive internal investigation, the results of which they will share with the Justice Department and Environmental Protection Agency. Under the Yates Memo, the company is required to turn over all information about culpable individuals, which would necessarily include identifying those senior managers involved in the cove-up.

While German privacy laws are much stricter than those in the United States, the allegations stated in the Complaint against Schmidt make clear there was a fair amount of e-mail traffic about the company’s attempts to cover up the scandal from US regulators and then actively deceive them when confronted with the allegations. Such evidence is likely trans-Atlantic so German privacy protections may provide little comfort. 

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