Oral evidence: Volkswagen emissions, HC 1021

Oral evidence, 20 February 2017.

Witness

Paul Willis

Chair

Good afternoon and welcome to the Transport Select Committee. Mr Willis, would you give us your name formally, tell us who you are and what your position is?

Paul Willis

My name is Paul Willis. I am the managing director of Volkswagen Group United Kingdom.

Chair

Thank you. Mr Willis, you have been in front of this Committee before. On the last occasion, a year ago, you were with Mr Schmidt and you told us that you found it “absolutely implausible that senior people in the company would have known of” the defeat device software. Since that time, six senior Volkswagen executives have been indicted in the US, including Mr Schmidt, another person has pleaded guilty and in Germany 37 Volkswagen employees are being investigated. Do you still stand by what you told us a year ago?

Paul Willis

As I also said to you a year ago, my responsibilities for my company are in the United Kingdom, so my knowledge of what may or may not have gone on in Germany or in the United States is quite limited. I said at the time that I thought it was implausible that a member of the board, from my recollection, was involved in any of this. It is my personal opinion that that is still the case, but I am aware of the statement of facts that you are referring to.

Chair

You are aware, but you did not say what you knew. You said you thought it would be “absolutely implausible” for senior people to know about this.

Paul Willis

When I referred to senior people, I was referring to the board, and I still say that—

Chair

You didn’t say that. Do you think it is a reasonable statement to make now—that it is implausible that senior people knew about what was going on?

Paul Willis

Let us be absolutely clear. My role is in the UK.

Chair

Mr Willis, I am not asking you what you knew; I am asking you about your judgment. Are you still of the opinion, given what has happened now, including the arrest of Mr Schmidt—

Paul Willis

My judgment, with the greatest of respect—

Chair

No, Mr Willis. I am asking you questions. I am asking you, in view of what has happened since the last time you came here, do you still believe it is absolutely implausible that senior people in the company would have known of the defeat device?

Paul Willis

With the greatest of respect—

Chair

No, not respect—

Paul Willis

I must answer the question. You have to know the context.

Chair

I am asking for an answer.

Paul Willis

My responsibilities are in the United Kingdom. I have no knowledge of what has gone on in the United States or in Germany.

Chair

Mr Willis, I am not asking you what you knew—

Paul Willis

Can I answer the question?

Chair

Mr Willis, I am asking you the question and I am picking up what you told us last time. I am not asking you if you knew something you were not telling us. I am asking about your judgment. A year ago you told us that it was absolutely implausible that senior people in the company would know. Are you still of that opinion?

Paul Willis

My judgment is—it is only my opinion—that it is absolutely implausible that any member of the board of Volkswagen AG would have known anything about this. However, I was not involved in any of the discussions, so it is only a matter of opinion and conjecture.

Chair

Senior people—not necessarily on the board.

Paul Willis

I do not know what your definition of senior people is.

Chair

They are your words—

Paul Willis

I do not know who these people are.

Chair

Mr Willis, please, when I am asking a question, don’t interrupt me. Those were your words to us a year ago—”senior people.” Senior people do not have to be on the board. Do you still think it is absolutely implausible?

Paul Willis

I repeat, Mrs Ellman, that I think it is implausible for a member of the board. I cannot comment on what has gone on in other countries, I am sorry.

Chair

Mr Schmidt told us last year that he “was not directly involved in the processes” related to the cheating, and he could not tell us why it was done. Do you think he was giving us correct information?

Paul Willis

To the best of my knowledge, Mr Schmidt’s evidence to this Committee, of course, was completely truthful—to the best of my knowledge.

Chair

Even though he has now been arrested by the FBI.

Paul Willis

He is indicted. That means he is being questioned.

Chair

Your opinion has not changed.

Paul Willis

I have no idea what questioning is going on with Mr Schmidt. I do not know what he has been indicted for. As far as I know, to the best of my knowledge, when Mr Schmidt was invited here he told the truth as he knew it. That is all I can say. I cannot answer for Mr Schmidt personally; I am sorry about that.

Chair

You also told us last year that Volkswagen would be publishing the Jones Day report. You told us how complicated it was. Is it still the case that the report is to be published?

Paul Willis

The findings of the Jones Day report are contained in the statement of facts in the United States.

Chair

Is the report going to be published here in the UK?

Paul Willis

To my knowledge, there will be no physical report.

Chair

There will be.

Paul Willis

To my knowledge, there will be no physical report.

Chair

There will be no report published.

Paul Willis

There will be no physical report published. The findings of the Jones Day report are contained in the statement of facts in the US.

Chair

That is the case, but when we were discussing this last year we were talking about what is happening here in the UK, not in the US. Will that report be published here in the UK?

Paul Willis

No, I am very clear: to the best of my knowledge, there will be no physical report published. The last time I was here, to the best of my knowledge, there may have been a report to be published, but that is clearly not the case. The findings of the Jones Day report are contained in the statement of facts, which is on the DOJ website.

Chair

Do you think it is reasonable to publish the report or its findings in the US but not in the UK?

Paul Willis

My understanding is that there are various investigations taking place in a number of jurisdictions in Europe. Against that background, I do not think it would be appropriate for me to comment, or for the company to comment, while those investigations are ongoing.

Chair

You think it is reasonable that such a serious report—a report that we were told would be published here—is published to the US Government but not here in the UK.

Paul Willis

We have been on the record on numerous occasions to say that the situations in the United States and in Europe are completely different.

Chair

If the findings of the report are included in the statement of facts, why hasn’t the full report been published?

Paul Willis

My understanding is that all the facts are included in the statement of legal facts. That is my understanding. You have to please excuse me, but I was not involved in the scope. I was not involved in the development of the report. The report is an independent report, and that is the decision of Jones Day. I am sorry; my knowledge is the same as yours with regard to what I read in the statement of facts.

Chair

“The decision of Jones Day.” Are you telling us that Jones Day have decided they will not publish the report, not the people who commissioned the report—Volkswagen? If a company in deep trouble calls on somebody to produce a report, surely the commissioner of the report decides whether the report will be published, not the people who drew it up.

Paul Willis

I think it is as I have said: investigations across Europe are ongoing, both civil and criminal investigations with a number of authorities, and that is why at the moment there is no report. We are waiting, and discussing evidence with the different authorities.

Chair

Whose decision is it not to publish at this stage?

Paul Willis

I do not know whose decision it is. I really do not know.

Chair

I thought you just said it was Jones Day who decided.

Paul Willis

I am really sorry, but all I can tell you is that the Jones Day report—the details from that piece of paper—is included in the statement of facts. That is the limit of my knowledge.

Chair

But you are a senior person.

Paul Willis

I am.

Chair

Are you urging that the report be published at the appropriate time in the UK?

Paul Willis

Again, I do not think it is wise for me to urge anything when authorities are investigating the current situation across Europe.

Chair

Yet we were told last time that it definitely would be published.

Paul Willis

I must apologise to you. I did say last time that, to the best of my knowledge, there would be a physical report. That is not the case, because the findings of the report are contained within the statement of facts.

Chair

Volkswagen appointed a former judge to clean up the corporate culture at Volkswagen, given the great difficulties that have been produced by what has happened. She left after less than a year in the job. Why is that?

Paul Willis

I do not know. I have read the statement—the public statement—as you read the public statement. My understanding is that the lady in question left by mutual agreement. From my point of view, the key point is that the position of compliance and integrity officer is still in place and the judge in question is being replaced by Frau Werner, so the position is still on the main board of Volkswagen Group.

Chair

Why has she left after less than a year in post? Doesn’t that sound very suspicious?

Paul Willis

I do not know. I know what you know—I am sure you have read it in the public statement—which is that she left her position by mutual agreement, and she has been immediately replaced by Frau Werner because of the importance of compliance and integrity within our organisation.

Chair

Does it suggest that something was wrong—that she could not go about her business without being impeded? Is it something like that?

Paul Willis

I completely refute the allegation that there was something wrong. I have seen no evidence of that. I know that the compliance of the company—I know what I am being asked to do in terms of compliance and integrity—suggests that we are a company working hard to be very transparent and open, and to progress in the appropriate way in the future.

Chair

Why do you think she left?

Paul Willis

Mrs Ellman, I simply do not know. I have read the press statement, like you, but the important point I must come back to is that Frau Werner replaced her in that same position. We, as a company, really understand and appreciate the importance of having a compliance member, an integrity member, on our main board.

Chair

You told us before that you were aiming for all the UK Volkswagen vehicles to be fixed by the end of 2016. That has not happened. When do you think it will be?

Paul Willis

I can set that in context, if you don’t mind. When we first met, we talked about how quickly we would be applying the technical measures. Of course my ambition and objective at that time was to be able to apply the technical measures by the end of 2016, but, in the event, the technical releases for the measures were not released as quickly as we hoped. One of the reasons for that was the detailed discussions we have had and are having with the regulatory authorities to make sure that there is no change at all in the performance of the cars. If you take the specific example—I cannot remember the exact number off the top of my head—there were 300,000 or 400,000 cars’ technical fixes released in December. I understand your point, but there was a reason behind it. If you are talking about where we are precisely, out of 1.2 million technical measures that have to be applied, as of today we have applied 470,000. At the current rate, we are applying those measures to 20,000 cars a week. We are very pleased with that level of technical fix. Our customers tell us that they are satisfied with the level of technical fix, and we have been talking to the Department for Transport and informing them of that progress. In the main, we are pleased. It is not perfect, of course. I would never pretend to you that it is perfect—we have had some small issues—but in the main we are pleased, and we are pleased to say that by autumn time—I cannot be more precise than that—we should have achieved what we hoped to achieve, which is all the vehicles where we committed to apply the technical measure.

Chair

Autumn—which year?

Paul Willis

I hope autumn 2017, all being well, although I must say there are some small issues around some of the vehicles. If I can give you a specific example, we have had some small issues where some customers, who might be the second, third or fourth owner of the car, have had some problems with the cars regarding, unbeknown to them, the tuning of the vehicle or the removal of DPF filters, and that is very problematic to fix. We have had a number of discussions around that, and somehow that is delaying it a bit.

Clive Efford

Because of the delay in carrying out these fixes, are customers of Volkswagen now eligible for compensation as has been paid in other countries?

Paul Willis

No. My position on compensation, and our company’s position, is absolutely consistent and clear. You cannot compare the situation in Europe with what you are referring to—I think you are referring to the United States. For example, after the technical fixes, there is no change to the vehicles in terms of fuel consumption and there is no change in any of the key relevant objective criteria, so the vehicles are more or less the way they were before the technical fix. Indeed, one of the discussion points we had previously at the Committee was the effect on residual value. From all the data that I analyse, and indeed all the data on residual values I see from people who are expert and independent, there is absolutely no evidence that there has been any degradation in residual value. What I come back to is that there is no loss. Compensation is a legal question in the end. There is no legal basis for compensation.

Clive Efford

Are emissions a factor in people deciding which cars they buy?

Paul Willis

Mrs Ellman asked me that question previously. From the industry data that I have, I think I said last time that, through independent surveys—you can read those for yourself—the range of percentages of people who choose cars based on emissions is between 1% and 5%. I am not saying that is irrelevant, because everything is relevant to us, but it is between 1% and 5% if you want the precise number.

Clive Efford

Is that your figure?

Paul Willis

No, that is absolutely not my figure; that is the figure I have from the new car buyer survey, which is an industry‑wide survey of the whole industry.

Clive Efford

Have you made an assessment of how much, for instance, Volkswagen has benefited from selling vehicles on the basis of people making decisions on falsified emissions information?

Paul Willis

Our position is that we did not falsify any information at all. We never sold cars on the basis of nitrogen oxide levels, so there is no falsification whatsoever. I have to say that. We completely refute that. We have misled nobody.

Clive Efford

As a result of actions by people as yet to be identified in Volkswagen, no one was misled over emissions from your vehicles.

Paul Willis

In Europe, our position is that no one has been misled over emissions in Europe. That is correct.

Clive Efford

As regards all those customers who bought your vehicles on the basis of information you were supplying that we now know was incorrect, for whatever reason, you do not feel any responsibility whatsoever to compensate them in any way. You have no responsibility to those customers at all.

Paul Willis

First, I have a great responsibility to our customers, because without responsibility to our customers we do not have a business, so I come back and say to you that we have a very important responsibility to our customers. That is why we are working so hard to apply the technical fixes and why I have explained to the Committee what we have been doing. But can I come back to you, because we must be absolutely clear on this point? At no time were any vehicles sold to anyone in Europe based on nitrogen oxide levels. Yes indeed, through Government taxation, CO2 levels are quoted in various brochures for all manufacturers, but CO2 is a completely separate topic and CO2 is not affected in any way by nitrogen oxide.

Clive Efford

I want to come back on the issue about duty of care to customers. You say there is no material loss that can be identified in Europe. In answer to this Committee previously, part of your justification for not providing compensation to UK customers was that a recall would take longer in the US than in the UK. Given the substantial delays that we have seen, what is your position now?

Paul Willis

Let us set that fully in context. As I have also said to this Committee on more than one occasion, you cannot compare the United States with Europe because their regulations are completely different, the engine configurations are completely different and the technical measures are completely different. Let’s be very specific on the technical measures.

Chair

The point that Mr Efford is making to you is not the technical point; it is about the time involved to put things right, and you are now talking about a much longer delay here than was anticipated. That is the key point.

Paul Willis

I can answer that. First, the technical measures in the United States never put the cars back to compliance at all. They do not. In Europe, we apply the technical measures in between 30 minutes and one hour. It is a completely different situation.

Chair

There may be other issues around that.

Stewart Malcolm McDonald

Welcome back, Mr Willis. In your last appearance before the Committee I asked you if Volkswagen was an ethical company and you said yes, it was. Do you still stand by that?

Paul Willis

Yes. I am a proud employee of Volkswagen, absolutely.

Stewart Malcolm McDonald

Is it an ethical company?

Paul Willis

I think Volkswagen is an ethical company, yes indeed.

Stewart Malcolm McDonald

You also said at that hearing that it was a company that knew right from wrong. Do you still stand by that?

Paul Willis

I think the majority of the employees, the people I work for, and people in the United Kingdom and me certainly, know the difference between right and wrong. I absolutely stand by that.

Stewart Malcolm McDonald

Can you tell the Committee, Mr Willis, who is the current chair of the supervisory board?

Paul Willis

The current chair of the supervisory board is Mr Pötsch.

Stewart Malcolm McDonald

His name is Mr Pötsch. That is a man you told the Committee at your last appearance you knew very well.

Paul Willis

I know Mr Pötsch very well.

Stewart Malcolm McDonald

How long have you known him?

Paul Willis

I have known Mr Pötsch since plus or minus 2001 and 2002. At one stage, Mr Pötsch sat on the board of Volkswagen UK in the early part of the 2000s.

Stewart Malcolm McDonald

Before he became the chair of the supervisory board, was he not the chief financial officer?

Paul Willis

Indeed, he was, yes.

Stewart Malcolm McDonald

He was the chief financial officer, I think, until October last year. Is that correct?

Paul Willis

That is indeed right.

Stewart Malcolm McDonald

In November last year, the German market manipulation investigation was widened to include him. Is that correct?

Paul Willis

If you say so, yes. I am sure you are right, yes.

Stewart Malcolm McDonald

Given that he is now part of that investigation, why has he not stood aside?

Paul Willis

I cannot answer for Mr Pötsch, but I would say it was because he had no knowledge of the situation and he has a right to defend his position when he was CFO. By the way—I am sure you know how organisations work—in a big global organisation with over 600,000 employees, the finance department works over here, the sales department works over there and the engineers work over there. I think it is quite understandable, really, given how a big company works, that he would know nothing.

Stewart Malcolm McDonald

He was the chief financial officer, he is now being investigated by prosecutors in Germany, he is the chair of the supervisory board and you do not think he should stand aside when he chairs the board of a company that is ethical and knows right from wrong.

Paul Willis

It is not my position to comment on that. That is a decision for Mr Pötsch, but I am very sure Mr Pötsch knew nothing about this.

Stewart Malcolm McDonald

Do you think it would help the image of the company if he at least stood aside?

Paul Willis

I do not know. I know that we have clearly, in the United States, done something that is not right, but the image of the company in Europe is very good. Our sales were at a record level last year, so I and the board are very pleased with our sales. That is why we are concentrating on trying to satisfy customers. Make no mistake that our biggest priority over the last 18 months has been to try to satisfy our customers.

Stewart Malcolm McDonald

I want to pin this down, Mr Willis. The current chair, who was the chief financial officer, is currently subject to an investigation by prosecutors that covers the time he was chief financial officer. He is now chair of the supervisory board, and you do not see any conflict there.

Paul Willis

I do not see why he should stand down if he knew nothing about what was going on. He has a duty to other stakeholders in the company. He knows the company very well. He has a responsibility to many stakeholders.

Stewart Malcolm McDonald

And he is under investigation by prosecutors.

Paul Willis

Yes, but under investigation does not mean that there is anything wrong.

Stewart Malcolm McDonald

Indeed, he is innocent until proven guilty.

Paul Willis

Indeed.

Stewart Malcolm McDonald

I would have thought, given the mess that your company is in, that it would have made sense for him to stand aside while an investigation into him takes place.

Paul Willis

I repeat that I understand our company has faced some very serious problems since this issue, but I cannot go along with characterising it as a mess.

Stewart Malcolm McDonald

Really? Okay, let’s just take the last gentleman who appeared alongside you—Mr Schmidt. He has now been arrested for conspiring to conceal defeat devices, defrauding the EPA emissions control programme, cheating Volkswagen customers and violating the US Clean Air Act. If that is not a mess, what is?

Paul Willis

Mr McDonald, Mr Schmidt is innocent until he is proved guilty, so it is not up to us to speculate about what may have gone on.

Stewart Malcolm McDonald

I agree he is innocent until proven guilty, but come on, Mr Willis—most ordinary punters would look at this and say it is a mess.

Paul Willis

I disagree with you. I think most ordinary punters—

Stewart Malcolm McDonald

Of all those other executives who have been arrested, one has admitted guilt. This doesn’t look like a mess to you?

Paul Willis

I think most people wait until they hear the comments of the authorities instead of trying to get drawn into this sort of conjecture.

Chair

Mr McDonald, you have made the point, and it is correct that Mr Schmidt has not been found guilty.

Stewart Malcolm McDonald

Can I ask one final question before you go on, Chair? When you were last in front of the Committee, Mr Willis, Mr Stringer asked you what you were apologising for when you initially appeared before us in 2015. Can you remind us what you apologised for in 2015?

Paul Willis

I apologised for any ambiguity that we caused to our customers. We said that we had to apply technical measures to cars to remove any questions or concerns customers may have had about how the cars passed through the tests. I said, and I have repeatedly said, that it is an issue of the testing environment. That is what we have done. We have taken these cars in with a minimum of inconvenience to our customers—of course we do our best—to allay any doubts.

Stewart Malcolm McDonald

You said a lot of this, if not all of it, would be dealt with by the Jones Day report, and that it would put to rest any concerns that members of the Committee, members of the public and your customers might have.

Paul Willis

The Jones Day report is for you to read, and it is very clear what went on in the United States.

Stewart Malcolm McDonald

Why is it not being published in this country? I cannot understand that. You told us when you were last before the Committee that it would be. I asked you several questions about the possibility of its being edited and you went to great lengths to assure me that would not happen, it would all be transparent and we would all be able to read it.

Paul Willis

Mr McDonald, I apologise to you and the Committee. At the last meeting I, to the best of my knowledge, thought that there would be a physical report. That is not the case. The findings of Jones Day have been outlined in the statement of facts and—

Stewart Malcolm McDonald

When did your knowledge of that change?

Paul Willis

Where are we now—February? I cannot remember exactly, but it was when I started to read about the publication of the statement of facts, which I think might have been January, or something like that. I cannot quite remember.

Stewart Malcolm McDonald

When you say you started to read, what were you reading?

Paul Willis

I was reading the statement of facts.

Stewart Malcolm McDonald

That was published by the company for the press and the public to see and all the rest of it.

Paul Willis

Yes, that is right.

Stewart Malcolm McDonald

You have not had any conversations with senior directors or executives back in Germany about this. Were you reading about it at the same time as me, in the Financial Times?

Paul Willis

I read about it in the press statement like you, indeed, yes.

Stewart Malcolm McDonald

Clearly, with the greatest respect, you are the wrong guy here, aren’t you? I accept that we are the ones who invited you, but who would you put up to sit in front of this Committee? With the greatest of respect, I cannot get answers, and there are some questions I have not even asked you yet.

Paul Willis

I am the most senior guy in the UK.

Stewart Malcolm McDonald

That is clearly not good enough. You are not on the board of supervisors—

Paul Willis

No, I am not on the supervisory board.

Stewart Malcolm McDonald

You are not on the board of Volkswagen AG, so who do I have to talk to? Who would you suggest we invite?

Paul Willis

I would suggest that I am the most—

Stewart Malcolm McDonald

No, I want someone from Germany. I want someone from the board of supervisors. Who would you suggest?

Paul Willis

I am not going to suggest anybody. I am the most senior guy in the UK.

Stewart Malcolm McDonald

You are the guy to give us all the answers.

Chair

We accept you are the most senior person.

Paul Willis

In the UK, yes.

Chair

Mr Willis, you also told the Committee previously that Volkswagen has an “absolute obligation” to make sure that the vehicles “have the same characteristics and the same miles per gallon as we committed to.” Is that your position?

Paul Willis

Yes.

Chair

It is still your position.

Paul Willis

Yes.

Chair

We have had a lot of representations from members of the public concerned about vehicles developing faults after the fix has been applied. You made a brief reference to that before, but we have had representations particularly in relation to the exhaust gas regeneration valves. Is that something that concerns you, and what are you going to do about it?

Paul Willis

I have to say, Mrs Ellman, that every single complaint or inquiry that I get concerns me. We have had variations of questions from customers post technical fix. To put it in perspective, when a customer says there might be an issue with a vehicle, we have a system that you plug into the car—it is called a DIS machine—and it tells you if there is a fault in the car, or if something is not quite right. Following the application of 470,000 technical measures, we have had 3,500 queries, which is 0.75%.

Chair

Are they following any pattern? Are there any particular issues?

Paul Willis

I can explain to you in detail what the issues are. Of the 0.75%, 65% of inquiries refer to what I would call subjective issues—“My car does not quite feel right”—or to the fact that under heavy load or heavy acceleration there might be a different noise acoustic. That is 65%. Then we have had about 600 cases of EGR valves, which is what you referred to, and I think we have had literally a handful, a couple of hundred, of fuel. To come back to the EGR, we analysed in detail what the EGR issues are and we have worked with customers to find a resolution. In the majority of cases, we have found a resolution, but I have to say to you that, when we do the detail of what is actually wrong with the exhaust gas valve, the fault is to do with wear; it is not to do with the technical fix.

Chair

Have you had any issues about safety concerns?

Paul Willis

No, none. Zero.

Iain Stewart

In previous sessions you gave us an assurance that none of the Volkswagen employees in the UK was directly responsible for this situation. You also gave us an assurance that no one would lose their job in the UK because of it.

Paul Willis

Yes.

Iain Stewart

Can you give us an update on that? Has anyone been made redundant or is anyone’s job still under some threat?

Paul Willis

Nobody at all has been made redundant. As I committed to the Committee, I have a responsibility to make sure that no one is made redundant for something that is not the fault of any of the employees. In fact, in the last couple of years Volkswagen Group in the UK has had reasonable customer results, so we have been growing our revenues and volume, and, not related to anything to do with this topic, we have increased our headcount by about 30 people. In Milton Keynes, currently we employ—I do not know the exact number, but, let’s say, between us and financial services—about 2,300 people. We have increased normal business. However, as a result of trying to make sure that we look after customers properly and to try to resolve any issues that may have occurred, we have employed 47 more people, some in Leeds in our customer service centre and some with the AA to go to the highlands and islands, and we have redeployed 30 people from other parts of the business to focus on customers. Plus or minus, I think we have 77 people who in 2016 were concentrating on customers, on trying to resolve any issues that came up, to try to satisfy our customers. Coming back to your point, nobody has been made redundant, and in fact my understanding is that in the dealer network, where we employ 25,000 people throughout the United Kingdom, at the moment there has been no impact either. Indeed, we are trying to find more people to help us apply the technical fixes.

Iain Stewart

I was going to ask about the relationship with the dealers. Have any dealerships walked away from the company and said they do not want to sell Volkswagen cars anymore?

Paul Willis

No.

Iain Stewart

Everything is working as you thought in dealership relations.

Paul Willis

As I said at this Committee, from the very onset in September last year we have worked very closely with our dealers to support them in many aspects of the business. We have not done a perfect job, because there is no such thing as perfection, and if there is something that is not quite right, that we are not doing right, we sit around the table and have a discussion to try to resolve the problem.

Mark Menzies

Welcome back, Mr Willis. Has Volkswagen not published the Jones Day report because it provides evidence that UK customers were deliberately misled by Volkswagen and therefore are owed compensation?

Paul Willis

No; it is absolutely clear. Forget about Jones Day. No one will be able to say that we misled customers in any way. I am absolutely clear on that. We have never ever sold cars on the basis of nitrogen oxide emission levels. In our view, we have not misled customers in any way.

Mark Menzies

But you did provide false information on nitrogen levels.

Paul Willis

No. We did not provide any information on nitrogen levels to customers.

Mark Menzies

You did not try, hope or seek to mislead.

Paul Willis

No. I can be absolutely categorical. We did not mislead anyone with those cars.

Mark Menzies

We might return to that. The US Justice Department has access to Jones Day, and in the US Volkswagen has agreed a huge compensation package with US authorities. They have access to the report and compensation follows. Is that not a bit of a coincidence?

Paul Willis

My understanding is that we have worked hand in glove with the authority in the United States, because there was a breach of the law and a negotiated settlement.

Mark Menzies

You have worked hand in glove with authorities in the United States. Have you worked hand in glove with authorities in the United Kingdom?

Paul Willis

I think so, yes. I know the Minister is coming.

Mark Menzies

We might come back to that. In January last year I asked you, “If you are a straightforward organisation, why did you feel the need to install a defeat device in order to deceive customers, Government and regulatory authorities?” You replied that the answer to my question was, “We have to wait for Jones Day. Our position is very clear: this is not a defeat device. We have to wait for Jones Day to have full clarification.” But by failing to publish the report, despite its being there and ready to go, you have proved that you are not a straightforward organisation, that you deliberately deceive your customers with defeat devices and now you want to avoid giving your customers, in your own words, full clarification. Why is that?

Paul Willis

As I said in the previous meetings, we did not fit defeat devices to our cars. That is our position and, therefore, we did not seek to mislead customers in any way.

Mark Menzies

You come before us, your mouth opens and words cascade out, and then the next time you come before us those words have changed in meaning.

Paul Willis

I am very clear, Mr Menzies, I have read exactly what I said.

Mark Menzies

I do not think you are clear in anything, Mr Willis. That is the problem.

Paul Willis

I have been very clear that we did not fit defeat devices to our vehicles in Europe and we did not mislead customers in any way.

Mark Menzies

I do not think you are clear in anything, and that is the problem. You open your mouth, words come out, and then, when it all gets difficult, those words either change their meaning or, the best phrase we have had today—I think we have had it about nine times—you say “to the best of my knowledge,” but “best of my knowledge” does not really seem to stretch very far because you do not seem to know very much, even to the point where we have had phrases like “I do not know,” “I cannot recall,” “I read it in the Financial Times at the same time as you,” in reference to Mr McDonald’s questions to you. Is it that you are somebody who is following a brief and this is what you should say when you are in front of the Committee, or do you actually believe this stuff?

Paul Willis

Mr Menzies, I think you know my position. My position is that I am responsible for Volkswagen Group products in the United Kingdom. I am absolutely clear in my view of what the company has done. I am really clear that we have not misled customers in any way. After all, my part of the organisation is responsible for producing all the marketing material. I am really clear: we have not misled customers in any way.

Mark Menzies

That is good to know. When you came before us, again your opening gambit, like the first time you came in October 2015, was how sorry you were—mea culpa—how awful it all was and so on. Today you sit in front of us and you say you have done nothing wrong.

Paul Willis

I am sorry for any ambiguity or confusion that I have caused to customers.

Mark Menzies

You are sorry you have been made to look daft. You are sorry that you have been in a situation where Volkswagen was caught red-handed doing things that it should not have been doing. That is what you are sorry for.

Paul Willis

I am afraid, Mr Menzies, that I have to refute that statement.

Mark Menzies

Then publish the Jones Day report. Finally, before I finish, one thing that you assured us when you came before us in the second session of 25 January was that the British taxpayer should not be out of pocket. You then went on to say, “If necessary we will have a meeting with HMRC.” Tell me about those meetings.

Paul Willis

First, again in context, I am very clear that the British taxpayer should have no liability on this topic. I fully agree with that; I said it in the Select Committee’s first meeting and I stick by that today. Therefore, we have had discussions with HMRC—sorry, the Treasury—and we have had discussions with the Department for Transport. Indeed, I discussed with Mr Hayes the payment that we made, because I believed that the testing of the vehicles was a result of the confusion that happened last year. That is why I stuck by what I said at the time, and I stick by it today. The British taxpayer should have no liability for—

Mark Menzies

Excellent, so as a result of Volkswagen trying to deceive people, you have made a payment to the British taxpayer. How much was that for?

Paul Willis

May I come back? I am sorry, but I have to say that it is not because Volkswagen tried to deceive people. It is because, as a result of this discussion, the Department for Transport undertook a testing regime and I paid for that £1.1 million.

Mark Menzies

If you had said to me, “We made a mistake. We set out, and somewhere in the organisation someone got a bit carried away, they tried to be really clever and make these cars out to be something they were not—still good cars, but something they were not—and we got caught and we are really sorry,” I would have complete respect for you. As a result, you sit there and you are someone who is a completely incredible witness.

Paul Willis

I am sorry, but—

Mark Menzies

I feel sorry because I am not sure whether it is because you are somebody who is trying really hard on behalf of Volkswagen to hope this goes away. When we have the Minister in front of us we will be asking some questions of him, but can you give me absolute assurance that everything the Department for Transport asked for, every cost HMRC asked for, has been met by Volkswagen UK?

Paul Willis

We have paid the £1.1 million, and we said the taxpayer should not have any liability.

Mark Menzies

Were there any other costs or was there any other information the Department for Transport asked you for that you have not provided?

Paul Willis

No.

Mark Menzies

They did not ask you for a copy of the Jones Day report.

Chair

You have answered everything the Department asked you.

Paul Willis

Yes.

Mark Menzies

That will do.

Paul Willis

Could I put that into context? I have had, I think, five meetings with the Minister. My team and I—sometimes I have not been present—have had meetings with the Department for Transport to update them on the ongoing fixes.

Mark Menzies

You have given them everything they wanted.

Paul Willis

Yes, indeed.

Karl McCartney

Mr Willis, I want to take it perhaps to the macro rather than the micro and just dealing with Volkswagen. Volkswagen got caught. Do you think you are the only company that was employing the actions that you got caught for, or are you going to give us the answer that you do not know?

Paul Willis

First, I do not accept your first premise. I have to say that we did not do anything wrong. Secondly, I cannot comment on what other car companies do.

Karl McCartney

But engine design and innovation is often copied right across the board when it comes to the car industry.

Paul Willis

I am not sure that is true.

Karl McCartney

Do you accept that other companies have been caught using defeat devices or turning off various things when the car is—

Paul Willis

I recall that Mr McDonald asked me a similar question in the last Committee meeting. It is like me asking you whether you know what is going on in China. I do not know what is going on with engine development in other car companies. What I can tell you, however, is that if you read the Department for Transport’s report on EU5 engines—let’s take them first—in the real world, out of 19 cars, our product was fifth. If we are fifth, it means that there are 14 vehicles that in the real world emit more NOx than us. That is the first question. In EU6 engines, out of a number I cannot remember—maybe it is 20 cars—our cars were second, fourth and fifth. I do not know what other car companies are doing.

Karl McCartney

Are you aware of Fiat Chrysler being under investigation? Are you aware of Renault engines and, by association, Nissan?

Paul Willis

Yes, I am aware.

Karl McCartney

You are aware of those.

Paul Willis

Yes, I am aware that several car companies in a number of jurisdictions are under investigation, but I do not know the precise detail of what for, because different car companies use different strategies during the testing regime.

Karl McCartney

But you think maybe Volkswagen was the one that got caught red-handed—the phrase one of my colleagues used.

Paul Willis

You have to ask the other car companies, but the position of Volkswagen is that we did nothing wrong.

Karl McCartney

Do you think using devices such as the one Volkswagen used is endemic across the car industry?

Paul Willis

I could not comment on what other people do.

Karl McCartney

Do you think you are on your own, as Volkswagen? Do you think nobody else does what Volkswagen has done?

Paul Willis

I do not think we did anything wrong.

Karl McCartney

On that point, Chair—

Paul Willis

We have discussed, and from the evidence from other people I think there is clarity, that the testing regime needs to be more reflective of real‑world driving, and in 2018, when the regime includes RDE, we will see a situation where there is more clarity on what actually happens at the tailpipe in the real world.

Chair

That is a different issue, which we have also been looking at.

Graham Stringer

Why didn’t you put NOx information out?

Paul Willis

We are not required to. NOx is part of the certification process.

Graham Stringer

You don’t think customers would be interested.

Paul Willis

I don’t actually. All I can tell you is that when I sit and study—because we study a great deal—people’s preferences on why they buy cars, it is between 1% and 5%. For example, Mr Stringer, perhaps you could help me understand why people continue to buy. I think there were more diesel cars sold in the UK last year than ever. What that says to me is that progressive Governments, through their taxation policy, actually encourage the sale of diesel. There is a bigger issue through taxation. Believe you me, I think it is important that we manage and control the environment we live in—I really believe that—but it is a bigger question than car companies; it is a question of NOx in the cities.

Graham Stringer

When you say you have done nothing wrong, you are referring to Volkswagen Group, not Volkswagen AG, are you?

Paul Willis

For me they are the same thing, sorry—Volkswagen AG and Volkswagen Group.

Graham Stringer

But Volkswagen AG admitted in September, didn’t they, that they had fitted defeat devices?

Paul Willis

In America, not in Europe.

Graham Stringer

There are no defeat devices operating in Europe.

Paul Willis

That is correct.

Graham Stringer

When you came before this Committee, which I guess you were not looking forward to, did you not think to talk to the other parts of Volkswagen so that you could answer the questions that the Chair asked you?

Paul Willis

I prepared very diligently for this meeting, Mr Stringer, and I got as much information as I possibly could. I apologise if I have not been able to answer one or two questions, but I have answered every question as openly and transparently as I possibly can.

Graham Stringer

Mr McDonald asked you who was the right person to answer these questions, and in answering the Chair you said you had no knowledge and it was not your responsibility. They were the most pertinent and difficult questions that you were likely to be asked. You have obviously thought and, as you said, you have prepared very hard. Why didn’t you ask other people who might know the answers to those questions in your business?

Paul Willis

I think I have answered the questions really rather well today. Our position is that we have not fitted defeat devices. If you ask customers, and you have your constituents, we have applied technical fixes to 470,000 cars. We have asked 78,000 people, as a sample of the 470,000, a whole series of questions, such as, “Are you happy and satisfied with what Volkswagen has done?” When I take the data, those people have said, within 0.03 percentage points, that they are satisfied with what we have done. The job that I have been focusing on in the last 15 months or so is to apply the technical fix for those vehicles, and I and my team have been working extremely hard to satisfy our customers.

Chair

Are you aware, Mr Willis, that some consumer experts are advising people not to have the fix?

Paul Willis

Yes, I am, and I am concerned about that. That is not what we and the Department for Transport want. We and the Department for Transport have been encouraging people to have the technical measures applied. The logic some of these groups and people are using not to have the technical fixes is simply not credible, in our view.

Clive Efford

I have to confess to being totally confused, so you are going to have to walk me through this. What are you fixing if you have not done anything wrong?

Paul Willis

The cars—we have been through this several times before—

Clive Efford

Take me through it again.

Paul Willis

The purpose of the technical measures is to remove any question of how the cars went through the testing regime. This had no impact. This has had no impact at all on real‑world driving—nothing.

Clive Efford

Volkswagen, at enormous expense, presumably—I don’t know how much you spent on these fixes—is making changes to these cars for no reason whatsoever.

Paul Willis

No. We are removing any doubt from our customers’ minds about how the cars may have got through the testing regime. Our customers expected us to do this, and that is why we are doing it.

Clive Efford

It was not sufficient to say to the customers, “Actually, these devices that everyone is complaining about have not been fitted in Europe,” or is it just the UK?

Paul Willis

There is no difference in the engine technology in Europe and the UK.

Clive Efford

It is just America.

Paul Willis

America is completely different.

Clive Efford

You couldn’t say, “There is no need to do this” and reassure them—just sort of go through—and make no alterations to the car whatsoever because there is nothing wrong.

Paul Willis

Our position is that the cars were not fitted with defeat devices. That is our position.

Clive Efford

But you are making no alterations to the cars that you are fixing because there is nothing wrong.

Paul Willis

No. We are making some slight alterations in how the engine works—in EGR circulation and the injection—but it is all about the testing regime. We say that we did not fit a defeat device to these vehicles, because that is a very precise definition.

Clive Efford

Okay, but there is nothing in the software that has altered the readings in the emissions.

Paul Willis

That is right.

Clive Efford

Nothing at all.

Paul Willis

That is absolutely right.

Clive Efford

There is no need to change anything when you fix these cars.

Paul Willis

There is nothing changed at all in the readings on the critical objective criteria that the authorities look at—nothing. The fuel consumption is the same, the CO2 is the same and the driveability is the same, so there is no change.

Clive Efford

It is incredible for us to sit here and listen to you say to the Committee that you are recalling 1.2 million cars across the UK and 8.5 million across Europe.

Paul Willis

That is right, yes.

Clive Efford

They are all going to be recalled but there is nothing wrong with any of them.

Paul Willis

Our position is that there is nothing wrong with any of them at all. That is our position: the cars were not fitted with defeat devices. Some people do not necessarily agree with us. Therefore, to remove any doubt whatsoever, we are applying the technical measures.

Clive Efford

What is causing the post-fix issues that drivers are complaining about?

Paul Willis

I have analysed this in a lot of detail. The number of people who are complaining is very small, and on every single occasion I can tell you that, if we do not find a resolution immediately, we have a methodology to try to find a resolution. By the way, just to be clear, a lot of the issues that people have come up with post technical measure are actually nothing do with the technical measure. However, that is not the point. The point is that we have a responsibility to make sure that if there is something wrong with the car, whether or not it is related to the technical measure, the customer walks out of our retailer satisfied.

Clive Efford

Clarify the figures for me. There are 500,000 vehicles affected in the United States. Is that a figure you are aware of?

Paul Willis

Yes, that is right.

Clive Efford

But there are 1.2 million vehicles in the UK alone and 8.5 million across Europe.

Paul Willis

That is correct.

Clive Efford

But in America you have paid out $19.6 million in compensation and in the UK you have not paid anything.

Paul Willis

That is because, as I keep saying, you cannot under any circumstances compare the situation in the United States with Europe. You cannot at all. It is a different situation.

Chair

It is amazing, isn’t it, Mr Willis, that you have not done anything wrong, yet you are doing all this work and spending this money? When you first came in front of the Committee, you were full of apologies but today you say you have not misled customers in any way. What has changed? Is it your legal advice?

Paul Willis

No, not at all. I am still apologetic to all our customers because—

Chair

What are you apologetic for if you have done nothing wrong?

Paul Willis

There somehow has been an element of doubt in some of our customers’ minds—

Chair

I think it is a bit more than an element of doubt.

Paul Willis

I have spoken to many customers. I have stood in our retailers and spoken to customers. I have spoken to the biggest fleet companies in the UK. I have spoken to the British Vehicle Rental and Leasing Association and I have to say they have a completely different view from the MPs around this table. I come back to the point that they understand what is going on, they say there is no basis for compensation and that we are doing a good job with applying the technical measures.

Chair

It is only this Committee that has any problem with what has gone on. Is that what you are saying?

Paul Willis

I am not saying it is only this Committee. My job is to answer your questions to the best of my ability, and with any customers, consumers, or any journalists in fact—I have had discussions with journalists—we have a very open policy and we will attempt to answer the questions as best we possibly can. If you read what the journalists say, they seem to understand what has happened as well.

Chair

The last question, Mr McDonald.

Stewart Malcolm McDonald

Thank you, Chair—much appreciated. It is clearly not just this Committee that has questions about what is going on. That is why Volkswagen is in front of prosecutors in all four corners of the globe. I want to come back to something we touched on but did not get much of an answer on, and that is the departure of Christine Hohmann‑Dennhardt. She was one of the first appointments of the current chair of the supervisory board. You had poached her from Daimler—

Paul Willis

That is right.

Stewart Malcolm McDonald

Your great big rival. Surely the fact that she has gone is a blow to the authority of the chair of that supervisory board. It was said to be mutually agreed, so can you shine some light on that mutual agreement?

Paul Willis

I cannot shine any light on that mutual agreement. I come back to the point, Mr McDonald, that we understand, and are committed to, the importance of a compliance and integrity officer, and that is why we still have a compliance and integrity officer.

Stewart Malcolm McDonald

Volkswagen said publicly at the time that there were differences in the understanding of her responsibilities. What were those differences?

Paul Willis

I do not know.

Stewart Malcolm McDonald

Did you not think to ask this before you turned up?

Paul Willis

No.

Stewart Malcolm McDonald

You did not think this would get asked. It is an elementary thing. If I were in your shoes, I would have thought, “They’re definitely going to ask me about why this woman left.”

Paul Willis

I think the announcement speaks for itself in so far as—

Stewart Malcolm McDonald

I think it does not. I want to know what the reasons were—

Paul Willis

I do not know.

Stewart Malcolm McDonald

Why did she think her job was one thing and your bosses thought her job was something else?