Over the course of my career 3 times someone wanted me to do something illegal. All of those times I handed in my walking papers. In one case I was asked to directly do something that would cause me to be acting in an illegal way, in two of the cases it would result in a company doing something that was illegal.

Yes, CTO's can run a 'special project' but the engineers are quite aware of the situation with respect to emission targets in this specific case and must have been very much aware that they were doing something that was fraudulent. The people mentioned there certainly had incentives but did not have VW in their pocket to such an extent that they could interpret their mandate as carte-blanche to commit fraud. These are not stupid people, on the contrary. My interpretation is that they were told to do this 'in whatever way possible' and that they interpreted this possibly as 'and that includes illegal but don't tell me about it'. Plausible deniability are the key words.

Whether that's the case or not will come out in due time, it always does. See Oliver North, Watergate and countless other scandals where you can only throw so many people under the bus until someone does a tell-all.

I note that the prosecutor hedges his words carefully ('likely' and 'orchestrated') and I also note that on the VW org chart it would not take more than 10 people to go from the CEO level all the way to a single programmer to insert this code.

That would also still require someone to either cooperate with this scheme at the auditors side, especially given the nature of the Bosch memo and the document linked by user PeterStuer which you may take as common knowledge within the automotive industry. In such circumstances a source code level audit of the software that ends up in the shipping devices to make sure everything is above board would seem to be indicated at a minimum.