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German prosecutors investigate ex-VW chief over emissions scandal German prosecutors investigate ex-VW chief over emissions scandal
(about 2 hours later)
German prosecutors are investigating the former Volkswagen chief executive Martin Winterkorn and another senior executive over suspected market manipulation in relation to the diesel emissions scandal. German prosecutors have opened an investigation into the former Volkswagen chief executive Martin Winterkorn over allegations of market manipulation in relation to the company’s diesel emissions scandal.
In a statement on Monday, the Braunschweig prosecutor’s office said the investigation centred on “sufficient real signs” that VW’s duty to disclose the possible financial damage of its manipulations may have arisen before 22 September 2015, when the carmaker publicly admitted wrongdoing. According to the state prosecutor’s office in Braunschweig, there was “sufficient concrete evidence” that Volkswagen had deliberately delayed informing shareholders of last year’s emissions scandal and the potential financial damage it could cause.
The VW chairman, Hans Dieter Pötsch, who was chief financial officer at the time, was not being investigated, the prosecutor’s office said, without disclosing the name of the other individual. The probe into market manipulation, initiated by a complaint on behalf of the German federal financial supervisory agency BaFin, is focusing on two former VW executives, including Winterkorn, who resigned in September after eight years as chief executive. Winterkorn has apologised and said he took full responsibility for the scandal, but so far denies any personal wrongdoing.
A VW spokesman said the company would study the statement before commenting further. While not disclosing the name of the second top executive, a statement on behalf of the Braunschweig prosecutor Klaus Ziehe clarified that the current chairman of the supervisory board, Hans Dieter Pötsch, VW’s finance chief at the time of the scandal, was not being investigated.
Winterkorn quit as VW chief executive after eight years on 23 September 2015, a day after the carmaker admitted that 11m cars worldwide had been fitted with defeat devices that reduced emissions under test conditions. Seventeen former VW employees, including lower-level managers, are being investigated on suspicion of fraud.
He apologised and said he took full responsibility for the scandal, but denied any personal wrongdoing. Related: VW profits down 20% after diesel emissions scandal
In its annual report on 28 April, Europe’s largest automaker acknowledged that it had not grasped the potential impact of the scandal until last summer, when the company realised that the devices in its cars may have violated US environmental law. Following accusations by the US environment protection agency (EPA), the German carmaker admitted on 22 September 2015 that 11m of its diesel cars were equipped with software that detected if the vehicle was being driven under lab test conditions, and adjusted itself to reduce emissions of harmful nitrogen oxide (NOx) pollution. Under real-world conditions, the NOx emissions were considerably higher.
The latest investigation will add to VW’s legal headaches and be grist to the mill of investors seeking to challenge the carmaker’s management at an annual shareholders’ meeting on Wednesday. The company has since admitted that Winterkorn was informed of the illegal emissions at least a year before, having been sent a memo detailing the cars’ higher nitrogen oxide emissions in May 2014.
In addition, it was revealed on Monday that European commission experts issued warnings about potential emissions test cheating as far back as 2010.
Companies registered on the stock exchange are obliged by law to inform investors of previously unknown events or circumstances that could considerably influence the price of shares.
In its annual report, published on 28 April, VW said it had not understood the full impact of the emissions scandal until the summer.
“According to the assessment at the time by the members of the board of management dealing with the matter, the scope of the costs expected as a result by the Volkswagen Group was basically not dissimilar to that of previous cases in which other vehicle manufacturers were involved, and therefore appeared to be controllable overall with a view to the business activities of the Volkswagen Group,” the report said.
The latest allegations come before VW’s annual shareholder meeting in Hanover on Wednesday, where Winterkorn’s successor, Matthias Müller, former chief executive of VW-owned Porsche, faces scrutiny from investors.
Having reported a net loss of €1.58bn for 2015, the carmaker still went on to pay its 120,000 staff bonuses of €3,950 per head – €474m in total – after pressure from its works committee and the metalworkers’ union.
In the US, the department of justice has demanded up to $46bn for the violations – a fine so large that some have speculated it may drive VW out of the American market.