Volkswagen executives charged with dieselgate stock market manipulation
VW's dieselgate drama continues
CAR-MAKING giant Volkswagen’s dieselgate woes are showing no sign of ending just yet, as prosecutors in Germany have charged some of the company’s most senior figures of capital manipulation during the emissions scandal.
According to the public prosecution office in Braunschweig (which is roughly 16 miles away from Volkswagen’s home city of Wolfsburg), the Volkswagen Group’s chief executive Herbert Diess and supervisory board chairman Hans Dieter Pötsch are alleged to have manipulated the stock market by not telling investors the company could face serious penalties for selling cars with diesel engines that didn’t adhere to emissions standards.
The prosecutors also accuse Professor Martin Winterkorn, who was Volkswagen’s chief executive from 2007 until his resignation on September 23, 2015, of deliberately withholding this crucial information from the shareholders during his time at the company.
According to the indictment report, Winterkorn is understood to have had “full knowledge of the facts and the resulting significant damage consequences” of the emissions manipulation as of May 2015. Pötsch is claimed to have been aware of this as of June 29, 2015, and Diess on July 27 that year — the same month he joined Volkswagen as chief executive of its car-making division.
As explained in the Braunschweig office’s official statement, the three men face criminal charges if they’re found guilty, as German law requires executives of listed companies to “publicly announce price-related events such as significant financial risks as soon as they become known”.
According to The Times, the company’s worth was slashed by €23bn in the week after the diesel emissions cheating crisis came to light on September 18, 2015, when the Environmental Protection Agency (EPA) in the USA published its Notice of Violation that alleged Volkswagen “installed software in its model year 2009-2015 2-litre diesel cars that circumvents EPA emissions standards”.
In a statement, the Volkswagen Group said: “Based on the findings available, the [Volkswagen Group’s ]Executive Committee is therefore of the opinion that, prior to the publication of the Notice of Violation, the Board of Management of Volkswagen AG did not have sufficiently concrete indications that would have led to the obligation to inform the capital market immediately.”
The Volkswagen Group goes on to say the substantial drop in its share value is the result of the EPA publishing its Notice of Violation “completely unexpectedly during ongoing discussions with Volkswagen”; going on to explain “the Board of Management of Volkswagen AG could not foresee this change in the approach of the US authorities”.
The Braunschweig public prosecutor’s charges are the latest part of the long-running diesel emissions test cheating crisis that shook Volkswagen, and were thought to have been put to bed after the company agreed to pay a fine of €1bn (£880m) in June 2018 for its role in the emissions scandal. Including the penalties accrued by other Volkswagen Group brands such as Audi and Porsche, the dieselgate crisis has cost the car maker “almost €30bn” (£26bn) as of May 2019.
The Volkswagen Group isn’t the only automotive enterprise that’s made headlines for diesel emissions-related reasons. Mercedes-Benz’s parent company Daimler AG has agreed to pay a fine of €870m (£776.8m) for failing to ensure some of its diesel-powered models adhered to nitrogen oxide (NOx) emission limits.
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