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Martin Winterkorn, Ex-C.E.O. of Volkswagen, Is Under Investigation Martin Winterkorn, Ex-C.E.O. of Volkswagen, Is Under Investigation
(about 3 hours later)
FRANKFURT — German prosecutors said on Monday that they had begun an investigation of the former chief executive of Volkswagen for possible violations of securities laws in connection with the company’s emissions scandal. FRANKFURT — The investigation into Volkswagen’s vast emissions scandal reached the top echelon of management for the first time after German prosecutors said on Monday that they were looking into the carmaker’s former chief executive and a member of the management board for possible violations of securities laws.
Prosecutors said they opened the investigation against the former Volkswagen chief, Martin Winterkorn, at the behest of Germany’s financial watchdog. He is suspected of having waited too long to disclose that the company faced an investigation in the United States, prosecutors in the city of Braunschweig said in a statement. German prosecutors said the former Volkswagen chief, Martin Winterkorn, is suspected of having waited too long to disclose that the company faced an investigation in the United States. Mr. Winterkorn is the first member of Volkswagen’s top management team identified as a suspect in the inquiry.
Mr. Winterkorn resigned in September, several days after the Environmental Protection Agency in the United States publicly accused the company of manipulating results of emissions tests. Court documents filed by Volkswagen indicate that Mr. Winterkorn was informed about emissions problems in the United States more than a year earlier. The investigation threatens to undermine the main defense of the company, which admitted last year to installing illegal software in 11 million cars to cheat emissions tests.
He is the first member of Volkswagen’s top management to be identified as a suspect in the investigation of how the company rigged 11 million diesel cars to give artificially low emissions readings when they were being tested. Volkswagen has said that the deceit was the work of a relatively small group of midlevel employees and that top management had not known about it. Since then, the carmaker has insisted that top management was not aware of the cheating software, known as a defeat device, until shortly before the disclosure of the deception in September. Instead, the company has cast the blame on a small group of middle managers suspected of installing the software, starting with the 2009 models.
Another member of the Volkswagen management board at the time is also under investigation, prosecutors said on Monday, although they did not identify the board member, citing German privacy laws. Prosecutors said, however, that the second suspect was not Hans Dieter Pötsch, who was Volkswagen’s chief financial officer when the scandal came to light and is now chairman of the supervisory board. The German investigation had previously focused on engineers and midlevel managers. But prosecutors are now expanding their investigation into the executive suite.
The investigation comes at an inopportune time for Volkswagen, which will hold its annual shareholders meeting on Wednesday. The investigation of Mr. Winterkorn will bolster investors who have filed lawsuits accusing Volkswagen of violating disclosure laws. Prosecutors in the city of Braunschweig did not identify the second board member, citing German privacy laws. However, they said that the second suspect was not Hans Dieter Pötsch, who was Volkswagen’s chief financial officer when the scandal came to light and is now chairman of the supervisory board.
Lawyers for Mr. Winterkorn did not respond immediately to requests for comment.
Volkswagen said it was surprised by the prosecutors’ decision to investigate Mr. Winterkorn. The company said in a statement that it had engaged outside law firms to examine the circumstances, and they concluded that no current or former members of the management board had violated their duty to shareholders.
The year leading up to the disclosure of the deception could prove the most relevant in the case.
Mr. Winterkorn resigned in September, several days after American regulators publicly accused the company of manipulating results of emissions tests. At the time, Mr. Winterkorn said he only learned about the defeat devices shortly before that point. “I am not aware of any wrongdoing on my part,” he said.
But American regulators at the Environmental Protection Agency first began asking Volkswagen questions about suspicious emissions data in mid-2014. Court documents, internal memos and emails suggest that Mr. Winterkorn and other executives were informed about the cheating around that time.
The company has acknowledged that a lower-ranking executive sent Mr. Winterkorn a memo in May 2014 informing him about a private study that raised questions about Volkswagen diesel cars sold in the United States. Volkswagen said in March that it was not clear whether Mr. Winterkorn took note of the study.
The management board, led by Mr. Winterkorn, also repeatedly pushed back against technical proposals for upgrading the emissions controls, according to two people who attended meetings where the proposals were discussed. The management board rejected the proposals because of cost, the people said.
Prosecutors said they opened the inquiry into the former Volkswagen chief at the behest of Germany’s financial watchdog.
The investigation comes at an inopportune time for Volkswagen, which will hold its annual shareholders meeting on Wednesday. The inquiry of Mr. Winterkorn will provide ammunition to investors who have filed lawsuits accusing Volkswagen of violating disclosure laws.
The deception has been a drag on the company’s profit and share price. Last year, the company reported its first loss since 1993. Since the admission, shares of the stock are off more than 20 percent.
One investors group said on Monday that it would demand that Volkswagen conduct a special inquiry into top management’s role. “Volkswagen not only made fraudulent cars,” Henning Wegener, a former German diplomat who is head of a shareholders group, said at a news conference in Frankfurt Monday. “It also defrauded shareholders.”