How West Virginia engineer exposed Volkswagen's catastrophic environmental fraud and wiped BILLIONS off company's shares

• Daniel Carder, 45, from West Virginia University produced a study that proved Volkswagen AG was cheating on U.S. vehicle emissions tests 
• Volkswagen Chief Executive Martin Winterkorn has paid the price for the scandal and resigned Wednesday, September 23
• The scandal has rocked Germany's business and political establishment
• So pronounced and shocking were the study's findings that Carder's team thought they had a problem with their research 
• The cheat helped saved fuel or improve the car’s torque and acceleration

By Reuters and Daily Mail Reporter

Published: 20:36 EST, 22 September 2015 | Updated: 18:50 EST, 23 September 2015

Daniel Carder, 45, is the engineer who blew the whistle on Volkswagen's environmental fraud

An unassuming West Virginia engineer has been identified as the man responsible for exposing Volkswagen's catastrophic environmental fraud that promises to go down in corporate history as one of the worst and most harmful of its kind. 

Daniel Carder, 45, and his small research team at West Virginia University produced a $50,000 study that proved that Volkswagen AG was cheating on U.S. vehicle emissions tests, setting off a scandal that cost the CEO his job, wiped billions from the company's shares and which could pose a bigger threat to the German economy than the Greek crisis. 

'The testing we did kind of opened the can of worms', Carder says of his five-member engineering team and the research project that found much higher on-road diesel emission levels for VW vehicles than what U.S. regulators were seeing in tests.

The results of that study, which was paid for by the nonprofit International Council on Clean Transportation (ICCT) in late 2012 and completed in May 2013, were later corroborated by the U.S. Environmental Protection Agency and California Air Resources Board (CARB).

Carder's team - a research professor, two graduate students, a faculty member and himself - performed road tests around Los Angeles and up the West Coast to Seattle that generated results so pronounced that they initially suspected a problem with their own research.

"The first thing you do is beat yourself up and say, 'Did we not do something right?' You always blame yourself," he told Reuters in an interview. "(We) saw huge discrepancies. There was one vehicle with 15 to 35 times the emissions levels and another vehicle with 10 to 20 times the emissions levels."

Despite the discrepancies, a fix shouldn't involve major changes. "It could be something very small," said Carder, who's the interim director of West Virginia University's Center for Alternative Fuels, Engines and Emissions in Morgantown, about 200 miles (320 km) west of Washington in the Appalachian foothills.

"It can simply be a change in the fuel injection strategy. What might be realized is a penalty in fuel economy in order to get these systems more active, to lower the emissions levels."

Carder said he's surprised to see such a hullabaloo now, because his team's findings were made public nearly a year and a half ago.

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Volkswagen Chief Executive Martin Winterkorn paid the price for the scandal over rigged emissions tests when he resigned on Wednesday and economists are now assessing its impact on a previously healthy economy

Wolfgang Porsche (left), Wolfgang Huber (center) and Stephan Weil (right) inform reporters that Volkswagen CEO Martin Winterkorn is resigning over the emissions scandal today

'We actually presented this data in a public forum and were actually questioned by Volkswagen,' said Carder.

The ICCT's research contract to Carder's team was sparked by separate findings by the European Commission's Joint Research Centre, which showed a discrepancy between test results and real world performance in European diesel engines.

The scandal has rocked Germany's business and political establishment and analysts warn the crisis at the car maker could develop into the biggest threat to Europe's largest economy.

Volkswagen is the biggest of Germany's car makers and one of the country's largest employers, with more than 270,000 jobs in its home country and even more working for suppliers.

Volkswagen Chief Executive Martin Winterkorn paid the price for the scandal over rigged emissions tests when he resigned on Wednesday and economists are now assessing its impact on a previously healthy economy.

"All of a sudden, Volkswagen has become a bigger downside risk for the German economy than the Greek debt crisis," ING chief economist Carsten Brzeski told Reuters.

"If Volkswagen's sales were to plunge in North America in the coming months, this would not only have an impact on the company, but on the German economy as a whole," he added.

Volkswagen sold nearly 600,000 cars in the United States last year, around 6 percent of its 9.5 million global sales.

The U.S. Environmental Protection Agency said the company could face penalties of up to $18 billion, more than its entire operating profit for last year.

Although such a fine would be more than covered by the 21 billion euros ($24 billion) the company now holds in cash, the scandal has raised fears of major job cuts.

Volkswagen is currently facing dozens of class action lawsuits from thousands of claimants covering all 50 states after admitting it rigged emissions tests to make their cars seem greener than they are (file image)

The broader concern for the German government is that other car makers such as Daimler and BMW could suffer fallout from the Volkswagen disaster. There is no indication of wrongdoing on the part of either company and some analysts said the wider impact would be limited. 

The diesel vehicles chosen for the West Virginia study were the VW Passat, the VW Jetta and the BMW X5. Unlike the VW vehicles, Carder said the BMW vehicle "performed very nicely - at, or below, the certification emission levels."

West Virginia University is not new to ground-breaking emissions research, having helped create the first technology to measure vehicle emissions on the road more than 15 years ago.

Carder belonged to a 15-member West Virginia University team that pioneered portable emissions testing as part of a 1998 settlement between the U.S. Justice Department and several heavy duty diesel engine makers including Caterpillar Inc and Cummins Engine Co.

The manufacturers agreed to pay $83.4 million in civil penalties after federal officials found evidence that they were selling heavy duty diesel engines equipped with "defeat devices" that allowed the engines to meet EPA emission standards during testing but disabled the emission control system during normal highway driving - enabling the car to save on fuel and improve torque and acceleration.

Volkswagen sold nearly 600,000 cars in the United States last year, around 6 percent of its 9.5 million global sales

When the news about Volkswagen broke last Friday, Carder heard from some of the heavy diesel engine manufacturers that were part of the consent decree.

"They saw what had happened and called to say: 'Good job, you guys,'" Carder said. "Some folks said: 'How did they not learn from our mistakes 15 years ago?'"

Regarding his role in unearthing the current scandal, Carder said there was no particular sense of excitement when his team confirmed that the higher VW emission results were real and not a consequence of faulty measurements.

"There's no incentive for us to pass or fail," he said. "Obviously, we don't want to see something spewing emissions and polluting the environment. But we really have no horse in the race, as they say." (Editing by Soyoung Kim and John Pickering)

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