German prosecutors in the city of Braunschweig have accused Volkswagen Group CEO Herbert Diess of holding back market-moving information on rigged emissions tests four years ago. The prosecutors said on Tuesday they would press criminal charges of stock market manipulation against Diess, as well as non-executive chairman Hans Dieter Poetsch and former CEO Martin Winterkorn, according to Reuters.
VW, which in September 2015 admitted using trick software a.k.a. defeat devices to cheat US emissions tests, has coughed out more than $30 billion in vehicle refits, fines and provisions. This latest indictment isn’t specifically about Dieselgate, but is part of a separate legal push to try management over an alleged delay in informing investors of the company’s wrongdoing. If accepted by a Braunschweig state court, the indictment would lead to a trial date being set.
Volkswagen shares lost up to 37% in value in the days after the scandal broke. Had investors known about the emissions test cheating, they might have sold shares earlier or not made purchases, the plaintiffs argue.
The carmaker is holding firm though. Lawyers for the three men said they would contest the charges that they knowingly held back vital information. VW said its full supervisory board would convene today to discuss the indictments. In a statement issued after an emergency meeting, the board’s executive committee said it “cannot see that there was any deliberate attempt not to inform the capital market.”
Diess’s lawyer said the indictment would not affect his role as CEO, adding that as Diess – which prior to being group CEO was chairman of the board at the Volkswagen brand – did not join the company until July 2015, he could not have foreseen the scandal would have such a big impact on the company.
Volkswagen and its executives have said the fallout from the scandal was not foreseeable, and that they had expected to reach a settlement with US authorities prior to the disclosure of the test cheating. Braunschweig prosecutors said the accused should have kept investors informed. “They pursued a strategy to achieve a settlement with the US authorities without disclosing all relevant information,” they said in a statement.
As for Winterkorn, prosecutors allege that the former CEO – who resigned in the days after the scandal broke after eight years at the the helm – was fully aware of the matter and potential financial damage to Volkswagen as of March 2015. Poetsch, who became a management board member at Volkswagen in 2003 and was made chairman in 2015, was allegedly informed on June 29 and Diess on July 27 that year.
This latest development shows that the fallout from Dieselgate isn’t over yet, even as VW is taking on a new image and rolling out electric cars. It has already claimed former Audi CEO Rupert Stadler, who along with three others were charged with fraud, false certification and criminal advertising practices. Braunschweig prosecutors in April charged Winterkorn and four others with fraud over their role in the manipulation of emissions testing.
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Germany really means business. When something is wrong they prosecute, even if it is the largest company in the country.