[Quest:] Shares in Fiat Chrysler dropped very sharply, has become the latest car company choking on emissions scandal. The U.S. environmental agency, the EPA, is alleging that Fiat Chrysler violated pollution laws by installing software in vehicles that allowed them to cheat on diesel emission tests. If you take a look at the actual announcement came late in the day in Milan, and whoosh, straight goes down the sharp share price, as the company loses 16 percent of its market valuable. That's a sizable amount for a company as big and as mature as Fiat Chrysler. The fall came at the end of the trading day, all because the EPA was about to issue a notice of violation. Now, Fiat Chrysler's chief executive says the automaker did not defraud anyone, and that its software is compliant with the law.
[Sergio Marchionne, Ceo, Fiat Chrysler Automobiles:] We have had discussions now with the EPA on this matter since December of 2015. So, it's been more than a year and a half. We have made tons of material available to them. We continue to discuss the issue and we are in the process now of presenting a more complete set of control strategies that will remedy all of their concerns. So, the issue could have been settled and should have been settled, I think, in my view, in a more efficient way, in a more business-like manner, as opposed to evaluating this to suggestions that we're right to defraud anybody.
[Quest:] Joining me now is Drew Kodjak, the executive director at the International Counsel on Transportation. He helped uncover the VW scandal. I'm confused here. I mean, they sort of say there was some software installed, but that it didn't break the law. What's going on?
[Drew Kodjak, Exec, Dir., Council On Clean Transportation:] Great question, Richard. There are two aspects of the law. The first is that any time you put software on a vehicle that changes the emissions when the vehicle is operated out in the real world, you have to disclose that information to the EPA. Fiat Chrysler did not do that. The notice of violation finds that there are eight different instances where the agency found software codes that had not been revealed. That is a violation of the clean air act. The notice of violation clearly states that. What we don't know, and what is still under discussions between the agency and Fiat Chrysler is whether or not those software codes are justifiable or not. Now, you can justify those codes if you can show that they were necessary to prevent damage from the engine, to the engine or the emissions controls. And that's the existing question that's still open.
[Quest:] So, this is not a Volkswagen situation, where they would have put in some software for the specific purposes of defeating the test?
[Kodjak:] It's close, Richard. We just don't know yet. It could be exactly the same as a Volkswagen situation. There is software on the vehicles identical or very similar to the types of software that Volkswagen put on its vehicles. That software detects when the emissions tests are being run, and it raises emissions when the vehicle is operated under normal driving conditions. Very similar to what happened with Volkswagen. The only difference right now is that the agency hasn't reached a determination as to whether or not Fiat needed that software to protect the engine. That's the difference.
[Quest:] In a sentence, sir, how much more of all of this do you think is out there, waiting to be uncovered?
[Kodjak:] The EPA is still in the process of testing passenger diesel vehicles on those manufacturers that produce them for sale in the United States. Since the Volkswagen scandal broke in September of 2015, we still haven't gotten a clean bill of health on those manufacturers and until that happens, there is still a big shoe that's waiting to drop.
[Quest:] And we look forward to you being on the program, to pick the shoe up and help us understand what it looks like, sir. Thank you very much, indeed. Good to see you on the program.
[Kodjak:] Thanks for being here.
[Quest:] A busy day. We'll have a Profitable Moment on conflicts of interest after the break. QUEST MEANS BUSINESS.