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Volkswagen bosses charged with market manipulation

Time 2 years ago

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.

That meant the executives had improperly influenced the company’s share price, they said.

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Winterkorn, pictured, resigned shortly after the 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 then 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 vehicles and providing services such as car sharing through smartphone apps.

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Volkswagen later 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’.

It is not unprecedented for a German CEO to continue while fending off charges. Deutsche Bank chief Josef Ackermann was required to spend two days a week defending himself against charges of breach of trust in connection with his duties as a board member of mobile phone concern Mannesmann.

Mr Ackermann, who is no longer CEO, was found not guilty in 2004.

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 look 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 has 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.

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