* EU lending arm offers to assist Renault diesel probe
* Bank asks whether loans used for disputed technology
* Renault denies any wrongdoing
By Laurence Frost and Gilles Guillaume
PARIS, March 24 The European Investment Bank has
asked French investigators to find out whether 800 million euros
($863 million) of EU-backed loans to Renault could
have been used to develop test-cheating diesel engines,
according to documents seen by Reuters.
The European Union lending arm wrote to judges leading a
fraud investigation into preliminary findings that Renault
diesel engines - like Volkswagen's - had been
configured to manipulate nitrogen oxide (NOx) emissions tests.
Renault, which has consistently denied breaking any laws or
emissions rules, had no immediate comment on Friday. The
Luxembourg-based European Investment Bank (EIB) and Paris
prosecutor's office did not respond to requests for comment.
Since 2009, the EIB has granted more than 8 billion euros in
preferential loans to back development of vehicles with lower
carbon dioxide (CO2) emissions by carmakers including VW,
exposed in 2015 for using software "defeat devices" to dupe U.S.
Technologies funded by the EIB have included diesel engines,
because they emit less CO2 than gasoline equivalents. More
recently, however, diesels have been shown to produce many times
the legal limit of toxic NOx in real driving.
"The EIB has granted Renault several loans to finance
projects including research and development to reduce vehicle
CO2 emissions (amounting to more than 800 million euros)," the
bank's chief fraud investigator told the French judges.
The Jan. 30 letter also proposes a follow-up meeting "in
order to establish whether our financing is implicated in your
investigations and to offer you all possible assistance."
It adds: "The EIB enforces a zero-tolerance policy towards
fraud and corruption and strives to ensure that no illegal
activity tarnishes its business."
Renault shares fell 7.8 percent in three days to end last
week at 78.65 euros after excerpts of a November report by
France's DGCCRF consumer fraud watchdog appeared in newspapers,
wiping 2 billion euros off the company's value. The stock has
since recovered some ground to 80.37 euros, as of 1210 GMT.
Based on the agency's findings, prosecutors opened an
investigation in January into fraud allegations against Renault
and its Chief Executive Carlos Ghosn. If found guilty, the group
could be fined up to 10 percent of annual revenue, or 3.58
The DGCCRF report, also seen by Reuters, cites engine
software parameters from Renault's own technical documentation
that partially or entirely deactivate anti-pollution functions
such as exhaust gas recirculation (EGR) and "lean NOx traps"
(LNT) outside predictable regulatory test conditions.
"The use of software in the (engine) calculator to limit the
effectiveness of anti-pollution devices mainly or exclusively to
vehicle approval tests is a strategy that Renault has
implemented," the DGCCRF concluded.
Renault has argued in press briefings that the limits on
emissions control were necessary to protect its engines while
maintaining driving performance and fuel efficiency, and
therefore allowed under current EU rules.
The carmaker has nonetheless recalled almost 11,500 cars to
tweak engine calibrations and reduce NOx emissions - a handful
of the 900,000 sold in France with the controversial software.
Changes will include extending the narrow range of air
intake temperatures within which the EGR is programmed to work.
In France's climate, the calibration renders the anti-pollution
device virtually useless for seven months of the year, Renault
itself concedes in company documents also seen by Reuters.
The EIB, the world's biggest multilateral lender with almost
80 billion euros granted each year, has faced scrutiny over its
funding to carmakers in light of the "dieselgate" scandal and
subsequent investigations in France and other countries.
VW, which has set aside 22.6 billion euros to cover its U.S.
criminal settlement and other costs, was awarded 400 million
euros by the bank in 2009 to develop "green technologies".
The German carmaker's use of EIB funds has been "very
thoroughly" investigated, bank President Werner Hoyer was quoted
as saying at a January news conference. "We have not found any
indication that our loans might have been used for fraudulent
($1 = 0.9270 euros)
(Reporting by Laurence Frost; Editing by Mark Potter)