VW bosses charged with market manipulation over ‘Dieselgate’ scandal
German prosecutors have charged Volkswagen chief executive Herbert Diess, chairman Hans Dieter Poetsch and former CEO Martin Winterkorn with market manipulation in connection with the diesel emissions scandal that erupted in 2015.
The three men are accused of deliberately informing markets too late about the costs to the company that would result from the scandal, prosecutors in the city of Braunschweig said. It is claimed that, in doing so, the executives had improperly influenced the company’s share price.
Winterkorn resigned shortly after the ‘dieselgate’ scandal became public. Poetsch was chief financial officer at the time and became chairman of the supervisory board in late 2015. Diess arrived at the company shortly before the scandal broke and was initially the head of its core Volkswagen brand. Winterkorn was succeeded as CEO by Matthias Mueller, who was subsequently replaced by Diess in April 2018.
The charges raise the prospect that Diess would have to spend significant time on his defence at a time when the company is facing a challenging transition towards producing more electric autos and providing services such as car sharing through smartphone apps.
Volkswagen has rejected the charges as “groundless”. Hiltrud Dorothea Werner, the board member responsible for integrity and legal affairs, said VW had “meticulously investigated” the matter with the help of internal and external legal experts over nearly four years. She said in a statement that if the indictment goes to trial, the company is “confident that the allegations will prove to be unfounded”.
Volkswagen admitted installing software in its diesel cars that turned on pollution controls when vehicles were being tested and switched them off during everyday driving. That made it appear as if the cars met tough US limits on harmful pollutants known as nitrogen oxides. Eleven million cars worldwide were equipped with the illegal software.
The diesel scandal subsequently cost Volkswagen more than 30 billion euros (£26 billion) in fines, recall costs and civil settlements. The firm apologised and pleaded guilty to criminal charges in the US, where two executives were sentenced to prison and six others charged, although they could not be extradited.
In a separate case, prosecutors in April charged Winterkorn and four others with fraud in the emissions cheating scandal, which has helped turn many Europeans against diesel engines and accelerated the push towards electric cars.
Prosecutors alleged that Winterkorn knew about the scheme since at least May 2014 and failed to put a stop to it. That contradicted his claim that he did not learn about it until shortly before US investigators announced it in September 2015.
Since the Dieselgate scandal, VW has committed its future to an all-electric range of vehicles. Pre-orders for the first car in VW's new ‘ID’ electric family, the ID.3, already number in the tens of thousands. The production model is due for release in 2020. Earlier this year, VW also announced that it would build an electric SUV for the Chinese market - the world's largest market for electric vehicles.
Meanwhile, prosecutors have fined fellow German automakers Daimler AG 870 million euros (£767 million) over the alleged certification of diesel cars whose emissions did not comply with regulatory requirements.
Prosecutors in Daimler's home city of Stuttgart said it was fined over a negligent violation of supervisory duties. Daimler said it had concluded it was “in the company's best interest” to conclude the proceedings and it would not appeal.
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