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Is Volkswagen's headquarters still hiding secrets related to the emissions cheating scandal? Image source: Volkswagen

Are there more shoes yet to drop in the Volkswagen (NASDAQOTH:VLKAY) emissions cheating scandal?

Reuters reported on Saturday that Volkswagen made several different versions of the "defeat device" software that allows its diesel engines to emit illegally dirty exhaust without being detected in conventional testing.

If true, that strongly suggests that a lot of people inside VW must have known what was going on.

If true, then the cost of this scandal just went up
The Reuters report, citing "three people familiar with the matter," said that VW applied the software to four different engine types over several years. Reuters' sources include a VW manager and "a U.S. official close to an investigation into the company."

If true, this report is bad news for Volkswagen (or at least for VW investors) for a couple of reasons.

First, if many people inside VW knew that the company was using software to illegally evade emissions rules, that makes the offense seem more outrageous. That in turn will likely encourage prosecutors and regulators to hit VW with bigger fines and penalties.

Given that those fines are already likely to run well into the billions, that could be an expensive problem.

If VW is still hiding something big, then this won't end well
Second, if there's more to this story than VW has so far let on, that won't play well with prosecutors or in the court of public opinion. Rule number one of handling a massive corporate scandal like this in the 21st century is to come clean right away. Look at how General Motors (NYSE:GM) handled its recall scandal. CEO Mary Barra certainly appeared to be pushing hard to get everything out into public view as soon as the facts were uncovered.

That early openness and cooperation bought GM some leeway with investigators and prosecutors, and almost certainly cut a billion dollars or more off of the settlement it was required to pay to avoid criminal charges.

If VW is playing by a different rulebook, if it's still hiding some of its defeat devices or other important aspects of the scandal, then this won't end well for the company.

VW needs to provide a lot of answers, and soon
Volkswagen already has a long list of people waiting for answers. Investigators in the U.S., in Germany, and in a rapidly growing list of other countries are all demanding to know how this happened and who within VW was responsible.

Meanwhile, owners of the affected diesel-powered VWs and Audis aren't happy. Analysts at Edmunds say that used VW diesels sold at used-car auctions declined in value by 6.5% from Sept. 1-Oct. 9, even as overall used-car prices have been rising.

Images

Image source: Volkswagen

Owners want to know how VW will fix its cars -- and whether the company will compensate them for lost value. Some U.S. owners are already urging VW to simply buy back all of the affected cars at pre-scandal blue book prices. That would cost roughly $6.9 billion, according to an Associated Press estimate.

VW's U.S. dealers are also unhappy. Until the scandal broke, diesels accounted for over 20% of the VW brand's U.S. sales. But right now, no new VW diesels are approved for sale in the U.S., and they won't be until regulators are satisfied that the 2016 models aren't cheating on emissions tests.

Some of these unhappy parties will file lawsuits, and settling those lawsuits will add to the already-huge bill that VW is facing. VW's best bet to limit the damage will be to disclose everything as soon as it can. 

It has been a month since the EPA announced its charges against VW. It's time for VW to tell the world the whole story.

John Rosevear owns shares of General Motors. The Motley Fool recommends General Motors. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.