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1938 ad for the "KDF-Wagen," the Beetle's first incarnation

[7]COMMENT: In the 1990’s, Volkswagen crafted an American advertising campaign that featured the German word “Fahrvergnugen” [8] to entice people to buy its cars.

Now, VW has found a potent legal strat­egy for shield­ing its exec­u­tives from poten­tial lia­bil­ity in the diesel emis­sions scan­dal: just cite Germany’s pri­vacy laws to avoid pro­vid­ing emails or any other com­mu­ni­ca­tions to US inves­ti­ga­tors [9].

We also note that VW executives have long conducted [10] their business affairs in such a way as to avoid mobile phones being used for surveillance. When the issue of mass data collection by NSA and GCHQ became at the end of the 1990’s [11], industrial espionage was the focal point of investigation and Germany’s apparent pique. 

Volkswagen’s behavior suggests that the company was aware of the NSA’s activities long before Eddie the Friendly Spook (Snowden) embarked on his “op.”


Martin Bormann (right) with Himmler

We note that Ferdinand Piech, the chairman of the board of VW, resigned in April of last year [13], perhaps knowing of the emissions scandal that was about to emerge.

Volkswagen evolved from the first “beetle” car, termed the KDF-Wagen [14]–“strength through joy” car. Designed by Ferdinand Porsche, whose grandson-in-law headed the firm until recently, the beetle was a major propaganda tool for the Reich.

As is the case with the other German “core corporations,” Volkswagen is controlled by the Bormann capital network. [15] Representatives of the firm were present at the August, 1944 meeting in Strasbourg (France), where plans for the Bormann directed flight-capital program and subsequent postwar “German economic miracle.”

“VW Refuses to Give Amer­i­can States Doc­u­ments in Emis­sions Inquiries”  [9]by Danny Hakim and Jack Ewing; The New York Times; 1/9/2016. [9]

Cit­ing Ger­man pri­vacy laws, Volk­swa­gen has refused to pro­vide emails or other com­mu­ni­ca­tions among its exec­u­tives to attor­neys gen­eral in the United States, imped­ing Amer­i­can inves­ti­ga­tions into the company’s emissions-cheating scan­dal, accord­ing to offi­cials in sev­eral states.

The rev­e­la­tion sig­nals a turn­ing point in the now openly frac­tious rela­tions between Volk­swa­gen and Amer­i­can inves­ti­ga­tors, after claims by the Jus­tice Depart­ment, in its own inquiry this week, [16] that the com­pany had recently “impeded and obstructed” reg­u­la­tors and pro­vided “mis­lead­ing information.”

Sig­nif­i­cantly, inves­ti­ga­tors say, Volkswagen’s actions limit their abil­ity to iden­tify which employ­ees knew about or sanc­tioned the decep­tions. Find­ing the peo­ple respon­si­ble for the cheat­ing is impor­tant to the law­suits: Penal­ties would be greater if the states and oth­ers pur­su­ing Volk­swa­gen in court could prove that top exec­u­tives were aware of or directed the activity.

Our patience with Volk­swa­gen is wear­ing thin,” New York’s attor­ney gen­eral, Eric T. Schnei­der­man, said. “Volkswagen’s coop­er­a­tion with the states’ inves­ti­ga­tion has been spotty — and frankly, more of the kind one expects from a com­pany in denial than one seek­ing to leave behind a cul­ture of admit­ted deception.”

He was one of sev­eral attor­neys gen­eral to express dis­sat­is­fac­tion in response to inquiries from The New York Times.

“I find it frus­trat­ing that, despite pub­lic state­ments pro­fess­ing coop­er­a­tion and an expressed desire to resolve the var­i­ous inves­ti­ga­tions that it faces fol­low­ing its cal­cu­lated decep­tion, Volk­swa­gen is, in fact, resist­ing coop­er­a­tion by cit­ing Ger­man law,” said Connecticut’s attor­ney gen­eral, George Jepsen. “We will seek to use any means avail­able to us to con­duct a thor­ough investigation.”

When he was named chief exec­u­tive shortly after the scan­dal broke, Matthias Müller [17] said “My most urgent task is to win back trust” and promised “max­i­mum trans­parency [18].” But open­ing up a com­pany known for its par­tic­u­larly insu­lar cul­ture [19] has been a tall order.

Ger­man inves­ti­ga­tors are not mak­ing sim­i­lar com­plaints about Volk­swa­gen. Klaus Ziehe, a spokesman for pros­e­cu­tors in Braun­schweig, a city close to Volkswagen’s head­quar­ters in Wolfs­burg, said that under Ger­man law, pros­e­cu­tors were allowed to carry out raids of Volkswagen’s Wolfs­burg offices to gather pos­si­ble evi­dence that could include email exchanges. He did not elab­o­rate on what they had found.

“We are not and do not want to be depen­dent on that which Volk­swa­gen gives us,” Mr. Ziehe said in a writ­ten response to ques­tions. At the same time, he said, the com­pany had been work­ing with Ger­man investigators.

“We can’t com­plain about our coop­er­a­tion with the com­pany,” Mr. Ziehe said. “We have the impres­sion that we have received every­thing that we have specif­i­cally requested.”

Volk­swa­gen, in a state­ment, said it could not com­ment on con­tin­u­ing proceedings.

Ger­many, a close ally of Amer­ica, is known for strict pri­vacy laws like its Fed­eral Data Pro­tec­tion Act, which lim­its access to data, par­tic­u­larly out­side the Euro­pean Union. And it is not the only Euro­pean coun­try with pri­vacy laws; sim­i­lar issues with Swiss laws have also ham­pered Amer­i­can inves­ti­ga­tors in their pur­suit of FIFA, soccer’s world gov­ern­ing body. Strains over data-sharing between the United States and Europe also emerged after the spy­ing rev­e­la­tions linked to Edward J. Snow­den, the for­mer National Secu­rity Agency contractor.

Ger­many also has a his­tory of refus­ing to extra­dite [20] its cit­i­zens to the United States. Still, Amer­i­can inves­ti­ga­tors have dealt with Ger­man cor­po­ra­tions for many years and often reach ami­ca­ble settlements.

The United States, where the scan­dal orig­i­nated, is seen as poten­tially con­duct­ing tougher inves­ti­ga­tions of Volk­swa­gen than Ger­many, where the car­maker is one of the nation’s largest employ­ers. Pros­e­cu­tors in Braun­schweig ini­tially said they would con­duct a for­mal inves­ti­ga­tion of Mar­tin Win­terkorn, V.W.’s for­mer chief exec­u­tive, but quickly back­tracked [21].

The Jus­tice Depart­ment, which filed a civil suit against Volk­swa­gen this week, has not ruled out fil­ing a crim­i­nal charge or tar­get­ing spe­cific exec­u­tives. A Jus­tice Depart­ment spokesman declined to say whether it was fac­ing obsta­cles in its own inquiry.

Lack­ing access to offi­cials at Volk­swa­gen head­quar­ters makes it more dif­fi­cult to deter­mine who was respon­si­ble for the wrong­do­ing, William H. Sor­rell [22], the Ver­mont attor­ney gen­eral, said in a recent inter­view in Burling­ton. “One of the things that’s impor­tant to the state and oth­ers in terms of look­ing at the egre­gious­ness or seri­ous­ness of the con­duct is who at Volk­swa­gen knew what and when,” Mr. Sor­rell said.

“It doesn’t make this attor­ney gen­eral feel all warm and fuzzy,” he said, that infor­ma­tion “has been com­ing out as grad­u­ally as it has been.”

Mr. Schneiderman’s office declined to com­ment on whether Amer­i­can inves­ti­ga­tors were col­lab­o­rat­ing with Ger­man pros­e­cu­tors. In declin­ing to turn over evi­dence to Amer­i­can inves­ti­ga­tors, Volk­swa­gen has prin­ci­pally cited the Ger­man Fed­eral Data Pro­tec­tion Act [23], an aide said in an email, as well as the Ger­man Con­sti­tu­tion, the Euro­pean Con­ven­tion on Human Rights, deci­sions of the Ger­man Con­sti­tu­tional Court and the Euro­pean Court of Human Rights, “and (for good mea­sure) pro­vi­sions of the Ger­man Crim­i­nal Code.”

Volk­swa­gen has main­tained that a rel­a­tively small num­ber of engi­neers and man­agers were respon­si­ble for the cheat­ing. None of the nine Volk­swa­gen exec­u­tives who have been sus­pended in con­nec­tion with the scan­dal were mem­bers of the man­age­ment board. But sev­eral, like Wolf­gang Hatz [24], who headed engine and trans­mis­sion devel­op­ment, reported directly to mem­bers of the board.

The rev­e­la­tions may raise ques­tions about the com­mit­ment of Mr. Müller [17] to clean­ing house. He was a pro­tégé of Mr. Win­terkorn and has close ties to a num­ber of the cen­tral fig­ures in the inves­ti­ga­tion. He was V.W.’s head of prod­uct plan­ning when the cheat­ing took place.

In a tacit admis­sion by Volk­swa­gen that it needs to smooth tense rela­tions with Amer­i­can offi­cials, Mr. Müller will meet with Gina McCarthy, the E.P.A. admin­is­tra­tor, on Wednes­day at the company’s request, a spokes­woman for the agency said.

Offi­cials at the office of the Texas attor­ney gen­eral had no imme­di­ate com­ment. The Cal­i­for­nia attor­ney general’s office declined to comment.

The Envi­ron­men­tal Pro­tec­tion Agency, along with reg­u­la­tors in Canada and Cal­i­for­nia, have also accused [25] Volk­swa­gen of installing devices to cheat on emis­sions tests on more vehi­cles than acknowl­edged, a claim Volk­swa­gen disputes.

Ger­many has faced crit­i­cism in the past for laws that place a higher value on per­sonal pri­vacy than pub­lic inter­est. Ger­man con­fi­den­tial­ity laws may have pre­vented doc­tors from inform­ing the Ger­man air­line Lufthansa that one of its pilots, Andreas Lub­itz [26], was under­go­ing treat­ment for depres­sion. In March, Mr. Lub­itz delib­er­ately crashed [27] a pas­sen­ger jet oper­ated by the Lufthansa sub­sidiary Ger­man­wings into a moun­tain in France, killing him­self and 149 oth­ers who were aboard.

“In the E.U., data pro­tec­tion is a fun­da­men­tal right that is in the Euro­pean char­ter,” said Paul M. Schwartz, a law pro­fes­sor at the Uni­ver­sity of Cal­i­for­nia, Berke­ley and co-director of its Cen­ter for Law & Tech­nol­ogy. The Ger­man fed­eral con­sti­tu­tional court has also iden­ti­fied a right to “infor­ma­tional self-determination,” he said. Such laws are “real obsta­cles,” he said, adding, “Euro­peans really take pri­vacy seriously.”

Still, while Amer­i­can reg­u­la­tors have faced chal­lenges before from Euro­pean cor­po­ra­tions, the level of frus­tra­tion in the Volk­swa­gen case is strik­ing. Philip Urof­sky, a part­ner at Shear­man & Ster­ling and for­mer assis­tant chief of the Jus­tice Department’s fraud sec­tion, said, “Obvi­ously, a Euro­pean com­pany ought to first and fore­most fol­low its own domes­tic laws.”

That said, pri­vacy laws have the poten­tial to be mis­used by com­pa­nies. “They frankly tie U.S. inves­ti­ga­tors’ hands, or even law firms doing inter­nal inves­ti­ga­tions, in ways that, in my per­sonal opin­ion, were not antic­i­pated or expected,” Mr. Urof­sky said.

Such issues as the invok­ing of pri­vacy laws are “not fre­quent, but they’re also not unusual,” said Ben­jamin M. Lawsky [28]for­mer super­in­ten­dent [29] of the New York Depart­ment of Finan­cial Ser­vices and a for­mer top offi­cial in the state attor­ney general’s office. But, he said, “it is the rare case that it ends up being a total obstruction.”

Mr. Lawsky left the depart­ment last year, shortly after it was involved in a a $2.5 bil­lion set­tle­ment [30] with Deutsche Bank over alle­ga­tions that it had manip­u­lated inter­est rates.

While he did not want to draw analo­gies to his own pre­vi­ous cases, Mr. Lawsky called such issues frus­trat­ing. Still, he said, inves­ti­ga­tors some­times even­tu­ally find ways to get what they want — whether by get­ting the infor­ma­tion from Amer­i­can com­puter servers, through nego­ti­a­tions with com­pa­nies or in coop­er­a­tion with for­eign law enforcement.

“Often when you start dig­ging down, those rules are sub­ject to inter­pre­ta­tion,” he said. “If you really push at how those rules have been inter­preted, you some­times can find ways to get around them.”

“Merkel’s Mobile Habit” by Chris Bryant; Financial Times [Blogs]; 10/24/2013. [10]

. . . . German corporate executives have long assumed that their mobile phone calls could be monitored.

At companies such as carmaker Volkswagen and chemical company Evonik, it is standard practice for mobile phones to be left outside prior to boardroom discussions or when in sensitive meetings on foreign trips.

“Our security people collect up the mobile phones and put them to one side” Audi board member Ulrich Hackenberg told the FT last month. . . . 

“Designing Cars for Hitler: Volkswagen and Porsche’s Nazi Roots” by Dietmar Hawranek; Der Spiegel; 7/21/2009. [14]

. . . . Porsche’s son-in-law, Anton Piëch, began managing the plant in 1941. In his study “The Volkswagen Plant and Its Workers in the Third Reich,” the German historian Hans Mommsen writes: “In the summer of 1943, Anton Piëch bluntly declared that he had to use cheap Eastern workers in order to fulfill the Führer’s wish that the Volkswagen be produced for 990 Reichsmark.”

In the early 1990s, this part of the history of the VW Group caught up with Ferdinand Piëch, the son of the former plant director Anton Piëch. Ferdinand Piëch, the head of Audi, was trying to rise to the top of the Volkswagen Group.

Piëch, who had pushed aside a number of executives along his career path, had his share of enemies. Some of them spread the rumor that Piëch was incapable of being the head of VW, hinting at the headlines it would produce in the important US market if the son of the former Wolfsburg plant director, who had used forced laborers, became the head of the modern-day VW Group.

Ferdinand Porsche himself served Hitler during the war as the head of his tank commission. He supported Hitler’s power and profited from the regime. . . . An Allied investigative commission later declined to file charges against Porsche, although he, his son Ferry and his son-in-law Anton were imprisoned in France for several months. . . .

Martin Bormann: Nazi in Exile; Paul Manning; Copyright 1981 [HC]; Lyle Stuart Inc.; ISBN 0-8184-0309-8; p. 25. [15]

. . . . Present were Dr. Kaspar representing Krupp, Dr. Tolle representing Rochling, Dr. Sinceren representing Messerschmitt, Drs. Kopp, Vier, and Beerwanger representing Rheinmetall, Captain Haberkorn and Dr. Ruhe representing Bussing, Drs. Ellenmayer and Kardos representing Volkswagenwerk, engineers Drose, Yanchew, and Koppshem representing various factories in Posen, Poland (Drose, Yanchew, & Co., Brown-Boveri, Herkuleswerke, Buschwerke, and Stadtwerke); Dr. Meyer, an official of the German Naval Ministry in Paris; and Dr. Strossner of the Ministry of Armament, Paris. . . .

Martin Bormann: Nazi in Exile; Paul Manning; Copyright 1981 [HC]; Lyle Stuart Inc.; ISBN 0-8184-0309-8; p. 281. [15]

. . . . But it is just as true that the river of wealth back into West Germany from assets sequestered by Martin Bormann and the corporations that participated in his brilliantly conceived program of flight capital was a major force in the recovery of the nation–and the best-kept secret in all of German history. The return of capital started slowly. As factories were rebuilt and revved up for production, money from Swiss bank accounts representing their secret accounts flowed into the Rhineland. It was termed investment money, and the first companies to enjoy its impact were those with demand products: automobiles, steel and chemicals. Ferdinand Porsche, who designed the famed “Tiger” tank, redisigned Hitler’s “people’s car,” the Volkswagen, and a new factory was erected to turn it out. . . .