FCA reveals U.S. state, federal probes on diesel emissions

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By Bernie Woodall and David Shepardson | DETROIT

DETROIT Fiat Chrysler Automobiles NV has received subpoenas from U.S. federal and state
authorities, including the Securities and Exchange Commission,
related to alleged excess diesel emissions by some of its
vehicles, the automaker revealed in a filing with the SEC on
Tuesday.

On the diesel emissions issue, FCA said it has “received
various inquiries, subpoenas and requests for information from a
number of governmental authorities, including the U.S.
Department of Justice, the SEC and several states’ attorneys
general. We are investigating these matters and we intend to
cooperate with all valid governmental requests,” FCA said in its
annual report filed Tuesday with the SEC.

Earlier this month, a person briefed on the matter said the
Justice Department has been involved in the matter for more than
six months after getting a referral from the Environmental
Protection Agency in July. Involvement by the SEC and state
attorneys general has not been previously disclosed.

FCA said Jan. 12 that the Justice Department was
investigating the matter.

The same day, FCA Chief Executive Sergio Marchionne rejected
the allegations, saying there was no wrongdoing and the company
never attempted to create software to cheat emissions rules by
detecting when the vehicle was in test mode.

FCA in its annual report said it is not able to predict the
outcome of the investigations, but disclosed that “the
resolution of these matters could have a material adverse effect
on our financial position, results of operations or cash flows
and may adversely affect our reputation with consumers, which
may negatively impact demand for our vehicles.”

In January, the EPA said the maximum possible fine against
FCA could be $4.6 billion.

FCA also is facing scrutiny of its emissions compliance from
European regulators. The French government said earlier this
month that its Consumer Protection Agency had asked a prosecutor
to investigate FCA’s diesel vehicles.

FCA in its annual report said government and regulatory
scrutiny “is expected to remain high.”

The focus FCA top management must pay to regulatory
intervention “may divert attention from other key aspects of our
business plan” and may require more recalls of vehicles.

Last July, FCA confirmed that the SEC and the Justice
Department is investigating its U.S. vehicle sales reporting.
Soon after that confirmation, FCA revised more than five years
of monthly U.S. vehicle sales figures to reflect a new reporting
method.



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