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BMW fined 61 billion won over emissions

Nov 10,2017
Three German carmakers - BMW, Mercedes-Benz and Porsche - came under fire on Thursday after an emission-cheating scheme was exposed by a local customs office in Korea.

Seoul Main Customs, a branch of Korea Customs Service, announced on Thursday that the three German auto companies imported 59,963 cars worth about four trillion won ($896.3 million) to Korea from 2012 to 2017 after either fabricating emission test results or replacing emission-related parts without notifying authorities.

The customs office said it reported the case, which involves 14 employees of the carmakers and local contractors hired by the auto companies to obtain government approvals, to the local prosecutors for violating customs regulations.

“These foreign carmakers conducted emission tests at their production centers outside of Korea and notified the local importers or contractors of the results,” said Chae Hee-yeoul, an investigator in the investigation coordination section at Seoul Main Customs. “Importers or contractors, after finding that the test results failed to satisfy the local standards, forged the documents and submitted them to National Institute of Environmental Research [a unit under the Ministry of Environment in charge of review of auto emissions], which were eventually approved by the person in charge who had no idea that the documents had been falsified.”

Chae explained that emission standards are stricter in Korea than in Europe or the United States, where most of the imported vehicles were manufactured. The carmakers also allegedly replaced some emissions-related parts on models that have already received permission to be imported and did not report this to the authorities as required by law.

“We were unable to find any evidence of whether the headquarters of the carmakers were involved in the scheme,” said Cho Bong-gil, chief of the investigation section.

Later in the day, the Environment Ministry announced it has decided to slap a total of 70.3 billion won fine on the auto companies.

BMW Korea will face a penalty of 60.8 billion won: 57.9 billion won for rigging the exhaust test results on 28 models and 2.9 billion won for failing to notify the ministry for changing parts on 11 models.

The 60.8-billion-won fine is the biggest penalty slapped on a carmaker by the Environment Ministry, more than triple the 17.8-billion-won penalty imposed on Volkswagen Korea in the wake of its own emissions scandal in late 2015.

The Environment Ministry said through a press release that it will revoke sales approvals for the 28 BMW models.

“BMW Korea decided to suspend the sale of seven models such as the M4 and M6, effective immediately,” said BMW Korea in a statement. “The decision comes due to the error in approval documents disclosed by the government … but the issues with the documents that were submitted for the importing process has nothing to do with the operating or safety of the concerned vehicle.”

Mercedes-Benz and Porsche were fined 7.8 billion won and 1.7 billion won for selling vehicles with different parts than originally reported.

Mercedes-Benz Korea explained in a statement that although import declarations were made for some vehicles before approvals were granted, the vehicles were fully approved by the authorities when they were actually sold. Mercedes also said the “modification reporting” was omitted on some vehicles for which it is “seeking further discussion with relevant authorities over the necessity of modification reporting or modification certification.”

“Regarding vehicles for which modification certification or modification reporting had been omitted, we understand that none of the cases were related to safety or performance,” a Mercedes spokesperson added.

BY CHOI HYUNG-JO [choi.hyugjo@joongang.co.kr]