Fiat Chrysler faces U.S. criminal emissions probe, report says

WASHINGTON/MILAN -- Fiat Chrysler Automobiles is under investigation by the U.S. Justice Department over its alleged failure to disclose software that violated emissions standards, people familiar with the matter told Bloomberg -- another legal hurdle for a company already under criminal scrutiny for its sales practices.

The possibility of a criminal action over diesel emissions violations comes after the EPA said on Thursday it found software in 104,000 Jeep Grand Cherokees and Ram 1500s that allowed the automaker to exceed pollution limits on the road. The criminal investigation shows the U.S. is pressing ahead on cases of alleged efforts to rig emissions testing in the waning days of the Obama administration. It isn’t clear where the inquiry stands.

The FCA scrutiny follows revelations of cheating and conspiracy that could cost Volkswagen AG $23 billion in the U.S. and Canada. Fiat Chrysler used technology from Germany’s Robert Bosch GmbH, which is also under investigation for its role in providing software to VW. Bloomberg News reported in September that prosecutors were looking into whether Bosch software was being used by automakers in addition to VW to skirt environmental standards.

Representatives for FCA and Bosch didn’t immediately respond to requests for comment.

Fewer vehicles

The U.S. investigation of Fiat Chrysler involves fewer vehicles than VW, said one of the people, who asked not to be named because the probe is confidential. The U.S. case against VW, which led to criminal charges and $4.3 billion in penalties earlier this week, centered on VW employees’ efforts to design a system that would evade U.S. environmental testing and then conspired to cover up its use when regulators began asking about it.

FCA CEO Sergio Marchionne said Thursday during a heated call with reporters the matter "has nothing to do" with VW. He said the software wasn’t intended to bypass emissions tests or operate differently in evaluation than in real-world use, calling such allegations “absolute nonsense.”

"We are confident that no one at FCA committed any fraud or tried not to be compliant," Marchionne said angrily.

Marchionne told the reporters he presumed the Justice Department was also investigating.

Peter Carr, a Justice Department spokesman, declined to comment.

Emissions charges may result in penalties as high as $4.6 billion -- based on the EPA’s estimate for the possible fine per car. Marchionne said Fiat could sustain a fine of that amount, though he "hopes" not to make any provisions for the case. He also confirmed the carmaker’s 2018 profit targets and reiterated Fiat has over 50 percent chances of meeting them.

The Justice Department last year began investigating whether FCA committed securities fraud over allegations that that the company inflated its U.S. car sales by paying dealers to report selling more vehicles than they actually did. The U.S. Securities and Exchange Commission is also investigating the automaker’s sales practices.