IAV Pleads Guilty in U.S. to Helping VW Cheat on Diesel Emissions

German engineering firm IAV Group has agreed to plead guilty and pay a $35 million fine for criminal conspiracy to help Volkswagen AG rig diesels to evade U.S. emission laws.

IAV admits conspiracy to violate the Clean Air Act and commit wire fraud between 2005 and 2015, when the cheating was disclosed by U.S. regulators. The company also agrees to be monitored for two years by an independence compliance officer.

IAV, which is 50% owned by VW, and the U.S. Dept. of Justice will enter the plea in a U.S. District Court in Detroit on Jan. 18, Automotive News reports. The company’s North American engineering and project offices are located outside Detroit near VW’s U.S. engineering and environmental office.

The settlement says IAV developed the software “defeat device” used to tighten emission controls during certification tests but relax them during real-world driving. In the latter case, nitrogen oxides emissions were as much as 35 times the allowable U.S. limit.

The ruling says IAV knew the purpose of the illegal software no later than 2008, when it was approved by an unidentified VW manager. VW used the defeat system to falsely gain certification for 2013 model diesels. The rogue software eventually was installed in about 335,000 such models sold in the U.S. between 2009 and 2014, according to the plea agreement.