Morits Skaugen [pictured], CEO of Oslo-headquartered shipping firm
I.M. Skaugen SE, says that he was "not surprised" when news about the Volkswagen car emissions scandal broke, because of the "many incredible similarities" with his company's legal dispute with ship engine manufacturer
MAN Diesel & Turbo SE, a subsidiary of MAN SE.
Last year, I.M. Skaugen sued Volkswagen-owned MAN for NOK 400 million (approximately $49.3 million) for allegedly manipulating tests to show that fuel consumption was lower than it actually was.
Speaking to Norwegian news outlet
E24 in an article published on October 11, the I.M. Skaugen CEO claimed that his company had contacted MAN about the alleged fuel consumption falsification of its engines in the summer of 2012. By that time, six engines had been delivered and the fuel consumption data for three of them had been falsified, he said.
"We bought diesel ship engines from MAN in 2000 for delivery in 2002 and 2003. We were looking for propulsion-friendly engines with low fuel consumption and low emissions. We chose MAN machines above two other options, which were being considered at the time," Skaugen said.
According to the shipowner, the engines had a higher fuel consumption than promised. As a result, "we spent an unbelievable amount of time and money to find out why they consumed more than expected and did a lot to try and get consumption down to the level where it should have been".
The Norwegain firm claims that the issue remained a mystery until June 2012. After MAN was notified about the issue, both parties are then understood to have discussed the terms of a settlement until around autumn of 2013; however, an agreement was not reached.
A claim was first registered with the Norwegian police in 2014, however as there was already a case in Germany regarding the issue of MAN ship engines, the police decided not to pursue the matter any further. The matter was finally shelved in Norway in March 2015.
Internal investigation
In May 2011, a year before I.M. Skaugen contacted MAN about fuel consumption anomalies, MAN had already
issued an announcement to confirm that it was launching an investigation into possible irregularities during the handover of 4-stroke marine diesel engines produced by the firm.
According to an interim result of the investigation, MAN said it was possible to externally influence the fuel consumption values for 4-stroke marine diesel engines obtained on test stands at MAN Diesel & Turbo SE and to display results that deviated from those actually measured.
"The extent to which this influence possibility has been made use of in the context of handover to customers and the potential financial consequences for the MAN Group will be examined in the course of further investigations. MAN SE will continue to investigate the matter and will contact the customers concerned," MAN said at the time.
MAN stated that it "immediately implemented all necessary measures to comprehensively investigate the matter," adding that "the revelation and the strict handling of this issue is a direct consequence of the compliance system implemented at MAN."
Court ruling
I.M. Skaugen has confirmed that it also gained access, through one of MAN's lawyers in Norway, to a judgment made two years ago by a court in Augsburg, Germany - the location of the engine manufacturer's headquarters. The court ruled that MAN manipulated factory tests - so-called Factory Acceptance Tests (FAT) - so that test results would meet the conditions outlined in the contract. This also included the fuel tests.
In the verdict, handed down in March 2013, the court imposed a fine for MAN's failure to supervise its employees. Describing the procedure used by MAN's employees to manipulate factory tests, the verdict said that test stands were fitted with a software developed by MAN, which included an additional feature that made it possible to manipulate the levels of fuel consumption.
"So what MAN has done is that it has promised that these diesel machines have a consumption that they fail to comply to. They created a proprietary software which they put on the machines so during factory tests they showed lower consumption than in reality. Just the same as in Volkswagen," Skaugen told E24.
MAN and Volkswagen
Referring to the perceived similar attitudes of Volkswagen and MAN, Skaugen told Singapore-based
Splash 24/7 yesterday: "Same group, same people, same methods and for same reasons. Their crisis management is the same; promising transparency, apologising and in our case offering nothing to compensate. We suspect there are many owners out there with similar issues that are not aware."
In an email to E24,
Jan Dietrich Müller, VP, Head of Group Communications and Marketing at MAN, stated: "The company has attempted to reach agreement with the customer in an amicable manner, outside the courtroom, and has negotiated with the customer for several months.
"The customer has unilaterally terminated the negotiations."
In reference to the fuel consumption falsification claims, Müller said: "Already in 2011, MAN SE informed the public about internal investigations of fuel consumption for some engines. MAN simultaneously informed the authorities and cooperated with them at all times. Customers, including Skaugen, were informed about this development."
According to Müller, MAN restructured and revised its FAT processes for measuring the fuel consumption of its engines at the Augsburg facility. In addition, he pointed out that the tests are attended by a third person.
"The fact that we discovered the relationship and the way we handled it shows how good procedures for compliance MAN has," he remarked.
When asked about the similarities with Volkswagen's manipulation of tests for emissions in diesel cars, Müller said that Volkswagen did not have a majority stake in MAN when the investigation into fuel consumption levels at MAN began.
Volkswagen AG acquired 53.7% of the share capital in MAN SE in July 2011. Regulatory approval was granted, and the takeover completed, in November 2011.
