Canada's idle response to VW's cheating cars

A hypothetical: You and a couple of partners own a Canadian used-car lot, and you figure out a way to diddle vehicle software, change the digital odometer readings and mask mechanical problems.

You sell tens of thousands of vehicles to suckers who think they're buying much newer, more reliable machines.

Then somebody exposes you, and you try to lie about it, but eventually you have to confess.

It's a safe bet you wouldn't be allowed to sell any more cars, and probably in short order the police would visit to charge you with fraud, because that's exactly what you'd be guilty of.

Now let's take a look at Volkswagen.

• VW Canada to offer $1,000 credit to owners, but still no fix

Between 2009 and 2015, VW Group sold about 11 million diesel-powered Volkswagens, Audis and Porsches worldwide that were designed to conceal their real emissions levels.

This was done deliberately. VW has admitted this. It amounted to fraud, simple as that.

About 100,000 of these rigged cars were sold in Canada, and their owners are now stuck with vehicles that everybody knows were part of an international scam.

Canada's response

The government of Germany, where VW is headquartered, reacted quickly. A few months ago, German police raided VW offices. Fraud charges are reportedly being prepared.

The U.S. Department of Justice, teeth bared, is going after VW for up to $46 billion US in fines.

At the same time, dozens of states are considering or launching suits, and the FBI has opened a criminal probe in Detroit.  

Volkswagen is reportedly citing German privacy law in an effort to withhold evidence from American investigators; it has promised some sort of technical solution.

But the Americans don't play games when it comes to this sort of thing. Ask the Swiss banks that tried to stonewall investigations into the American tax evaders they were abetting.

Canada, though, is taking a more, well, measured approach.

A spokesman for the Department of Justice in Ottawa, which you'd think would be hot on any case of national-level fraud, is apparently not doing much, if anything at all. An official there noted that Transport Canada sets and regulates vehicle standards.

An official at Transport Canada, meanwhile, said that because this is not a safety issue, but rather a "clean-air" issue, it's being handled by Environment Canada, which confirmed it is "investigating," and has been for months, but really couldn't discuss the matter.

Provincial governments are also looking into it. An Ontario official said that province is seeking "an Ontario-specific plan that sets out details on the actions that will be taken to fix impacted vehicles."

By contrast, here is what U.S. Assistant Attorney General John C. Cruden said last week in announcing the case against VW:

"Car manufacturers that … defeat emission control systems breach the public trust, endanger public health and disadvantage competitors."  

Boom.

Owners on the hook

So why such a comparatively timorous approach by Canadian officials?

"I don't even have the sense they are very actively considering doing something," said Tony Merchant, whose Regina-based law firm, a specialist in class action suits, is representing about 10,000 owners of rigged VW group vehicles. "They are just waiting for the U.S. to act."

Canada, he goes on, "is a great country in which to do illicit business because our governments are inactive."

Meanwhile, tens of thousands of Canadians are stuck with vehicles that are worth much less than they should be.

New VW and Audi diesel models have been yanked off the American and Canadian markets indefinitely. It would be interesting to see what a VW or Audi dealership would offer on trade-in for one of the fraudulent models they themselves sold.

And of course the rigged cars continue to pollute at illegal levels, which, says Merchant, means any Canadian province or American state could at any time decide to ban them from public roads.

For the time being, Ontario Drive Clean stations, knowing full well the vehicles are thwarting emissions testing equipment, are nonetheless giving their owners a pass.

But even the aggressive American authorities aren't doing much to help individual consumers.

That's in the hands of lawyers like Merchant, who says that in the case of corporate wrongdoing, private lawsuits take ages to reach a conclusion, and even then, "they sort of meet the bank robber at the door of the bank and say 'give back part of the money.' Not even all the money. Just part."  

'There is no fix'

Probably, says Merchant, it will be up to the scammed car owners to find a fix, "and there is no fix," let alone an "Ontario-specific" fix.

"If VW had an engine fix, which they don't have, they'd have used it instead of this period of lying. And even if they did have a fix, the cost would be beyond any corporation's capacity to endure."

Merchant says the only fair solution would be to buy back the vehicles, since they were sold on a false pretext.

But he predicts people will probably just be stuck with an engine additive, which does reduce emissions, but also reduces both power and mileage. And of course does little to restore the car's plundered value.

Oh, this just in: Matthias Mueller, Volkswagen's CEO, now says some of the rigged vehicles may have to be "brought back to Volkswagen" – repurchased, in other words.

"In theory," he told CNBC, "it's possible." No promises, of course, and no numbers.

Bottom line: like the banks that were too big to fail, VW is too big to jail. It'll keep doing business here.

And if you were conned into buying one of their pollution-mobiles, you're pretty much on your own.