A Volkswagen engineer has pleaded guilty to one count of conspiracy in the company's emissions cheating scandal and has agreed to cooperate in the widening criminal investigation.
James Robert Liang, 62, of Newberry Park, California, entered the plea Friday in US District Court in Detroit to one count of conspiracy to defraud the government through wire fraud. Liang is the first person to enter a plea in the emissions-cheating scheme.
Volkswagen has admitted to installing software on about 500,000 two-litre diesel engines in VW and Audi models in the US that turned pollution controls on during government tests and turned them off while on the road.
The Environmental Protection Agency found that the cars emitted up to 40 times the legal limit for nitrogen oxide, which can cause human respiratory problems.
Liang was indicted in June on one count of conspiracy to commit wire fraud and another count of violating the Clean Air Act.
According to a plea agreement unsealed on Friday, Liang admitted that he and others planned a special software function, known as a defeat device, that could cheat US emissions tests after recognising that a diesel engine they were designing could not meet customer expectations and stricter emissions standards.
Using the defeat device enabled VW to obtain a certificate from the Environmental Protection Agency needed to sell the cars in the US.
Liang pleaded guilty to the conspiracy charge before Judge Sean Cox. He will be sentenced on January 11. The judge said that sentencing guidelines call for Liang to serve five years in prison.
The cooperation of Liang, who began work in Wolfsburg, Germany, and also worked in the US, is a major breakthrough in the Justice Department's investigation into the carmaker's cheating scandal.
Volkswagen would not comment on the plea but said on Friday that it continues to cooperate in the investigation.
In one 2007 meeting in Ann Arbor, Michigan, with government officials, Liang participated as his co-conspirators misrepresented that VW's diesel vehicles complied with US emissions standards, according to the plea agreement.
"Liang knew that VW was cheating by implementing the defeat device and that he and his co-conspirators were considering deceiving EPA in this meeting," the plea agreement states.
In May 2008, the indictment says Liang transferred from Volkswagen headquarters in Germany to the US to help oversee the launch of the new "clean diesel" models.
Investigators uncovered internal company emails that show Liang and other VW engineers exchanged ideas about how to "effectively calibrate the defeat device" so that the cars would recognise when they were undergoing US emissions testing.
The software was designed to recognise when the cars were being tested on a treadmill-like device called a dynamometer.
In 2013, Liang and others exchanged messages in German about software that recognised when the engine was revving but the steering wheel was not moving, an indication that the car was undergoing a dynamometer lab test.
The software then calibrated the engine to run cleaner than it would in real world driving, in order to pass the test, according to the indictment.
"If this goes through without problems, the function is probably truly watertight! ;-)" one of the VW employees messaged Liang in German.