Martin Winterkorn, the former chief executive of the German auto maker Volkswagen, has been charged in Germany over his involvement in the company’s diesel emissions scandal.
The public prosecutor in Braunschweig
charged him and four other managers with fraud.
The auto maker said it would not
comment on the indictments.
Martin Winterkorn, 71, is already
facing criminal charges in the US, but is unlikely to face trial, as Germany
does not extradite its citizens.
He resigned soon after the so called
Dieselgate scandal erupted in September 2015.
In a statement, prosecutors accused
Martin Winterkorn of a “particularly serious” fraud, as well as a
breach of competition laws.
They said the former VW boss should
have alerted car owners and authorities in Europe and the US about the
manipulation of diesel emissions tests sooner.
They also accused Martin Winterkorn
of approving a “useless” software update designed to conceal the true
reason for the cars’ higher emission levels.
If found guilty, Martin Winterkorn
could face a prison sentence of up to 10 years.
Prosecutors did not name the other
four senior managers charged.
VW first admitted in September 2015
that it had used illegal software to cheat US emissions tests.
The devices, which allowed cars to
perform better in test conditions than they did on the road, were installed on
almost 600,000 vehicles sold in the US from 2009 though 2015 and millions more
globally.
They came to light after a study of
emissions by researchers at West Virginia University in the US.
The Dieselgate scandal sparked
investigations in Germany and other countries.
To date, the emissions scandal has
cost Volkswagen roughly €28 billion, ($31 billion).
Last month, the US Securities and
Exchange Commission (SEC) sued VW and Martin Winterkorn, accusing the company
of “massive fraud” over the emissions scandal.
The SEC claims VW misled investors
by issuing billions of dollars worth of bonds and securities, without
disclosing that it had cheated emissions tests.
VW said it would contest the SEC lawsuit vigorously.
According to German prosecutors, former VW CEO Martin Winterkorn may have known the automaker was cheating on emissions tests earlier than he admitted.
He quit in September 2015 after VW admitted to using software to lower the emissions from its diesel vehicles during tests.
Martin Winterkorn has since denied knowing of the violations until late in August 2015, shortly before the board reported them.
However, German authorities said they were now investigating Martin Winterkorn for fraud.
Braunschweig prosecutors said they had searched 28 homes and offices this week in connection with the scandal.
As a result, the number of people accused of misconduct had risen from 21 to 37, including Martin Winterkorn.
German prosecutors said in a statement: “Sufficient indications have resulted from the investigation, particularly the questioning of witnesses and suspects as well as the analysis of seized data, that the accused [Martin Winterkorn] may have known about the manipulating software and its effects sooner than he has said publicly.”
Earlier this month, VW admitted to US prosecutors that about 40 employees had deleted thousands of documents in an effort to hide systematic emissions cheating from regulators.
VW was also fined $4.3 billion by US authorities and agreed to plead guilty to criminal charges.
In addition, VW has agreed to a $15 billion civil settlement with environmental authorities and car owners in the US.
The company is also facing 8.8 billion euros ($9.41 billion) in damage claims following the collapse of VW’s share price after the scandal broke.
VW shares slumped by a third in the immediate aftermath of the scandal and are still 7% below their September 2015 level.
Volkswagen’s new CEO Matthias Muller has said the automaker can shine again in two to three years.
Addressing the company’s top managers on October 15, Matthias Muller said VW needed to become leaner and take decisions more rapidly.
The comments come as VW said it would recall 8.5 million cars in Europe as a result of the diesel emissions scandal.
The move was prompted by Germany’s automotive watchdog, which had earlier told VW to recall 2.4 million vehicles in the country.
German media reports suggest the KBA had rejected VW’s proposals that car owners could voluntarily bring their cars in for repair.
VW gave no details of the recall and said it would contact individual customers directly.
It added that it was working on solutions to fix the recalled cars “at full speed”.
Matthias Muller took over as VW’s chief executive last month when the previous head, Martin Winterkorn, stepped down as a result of the scandal.
He told managers on October 15: “We will significantly streamline structures, processes and (decision-making) bodies. We must become leaner and take decisions more rapidly.”
“Our competitors are only waiting for us to fall behind on technology matters because we are so preoccupied with ourselves. But we won’t let that happen,” Matthias Muller added.
Meanwhile, Italian police have raided VW offices in Verona and Lamborghini offices in Bologna.
Reports suggest Italian prosecutors are investigating alleged commercial fraud.
Last month, authorities in the US discovered some VW diesel cars had been fitted with a device to cheat emissions tests. VW subsequently admitted that up to 11 million cars worldwide could have the device fitted.
Volkswagen has launched a thorough investigation into the scandal, but new chairman Hans Dieter Poetsch has warned that answers would take “some time”.
The company has set aside €6.5 billion ($7.4 billion) to cover the costs of the scandal, but some experts believe the final bill could be much higher.
VW shares recovered slightly last week but are still down almost 20% since the scandal broke in mid-September.
Separately, Winfried Vahland, who was tipped to become VW’s North America boss, has resigned.
VW said Winfried Vahland was leaving because of “differing views on the organization of the new group region”.
German businessman Matthias Muller has been named as Volkswagen’s new CEO in the wake of the scandal of rigged emissions tests in diesel cars.
Matthias Muller succeeds Martin Winterkorn who resigned on September 23.
VW admitted cheating emissions tests in the US.
Some VW cars being sold in the US had devices in diesel engines that could detect when they were being tested, changing the performance accordingly to improve results.
Matthias Muller, who has been Porsche AG CEO since 2010, said restoring VW’s reputation was his top priority: “My most urgent task is to win back trust for the Volkswagen Group – by leaving no stone unturned and with maximum transparency, as well as drawing the right conclusions from the current situation.”
He also announced sweeping changes to the way the world’s largest carmaker was run, including handing greater autonomy to regional divisions.
Matthias Muller, 62, said he would tighten up procedures at the company: “At no point was the safety of our customers in danger. We will now have even stricter compliance. Our objective is that the people continue to use and drive our vehicles with confidence and pleasure. That’s 80 million people driving our cars worldwide.”
The US’s Environmental Protection Agency’s (EPA) findings of the scandal cover 482,000 cars in the US only, including the VW-manufactured Audi A3, and the VW brands Jetta, Beetle, Golf and Passat.
The automaker has admitted that about 11 million cars worldwide are fitted with the so-called “defeat device” – 2.8 million cars in Germany – and further costly recalls and refits are possible.
Half of VW’s sales in Europe – the company’s biggest market – are for diesel cars.
VW shares plunged around 30% in the days after the scandal broke.
Transport authorities in several countries – including the UK and Germany – have announced investigations in to the scandal.
VW CEO Martin Winterkorn has resigned after the revelation that the world’s largest automaker manipulated US diesel car emissions tests.
Martin Winterkorn said he was “shocked” by recent events and that Volkswagen needed a “fresh start”.
He added that he was “not not aware of any wrong doing on my part” but was acting in the interest of the company.
VW has already said that it is setting aside €6.5 billion to cover the costs of the scandal.
The world’s biggest carmaker admitted last week that it deceived US regulators in exhaust emissions tests by installing a device to give more positive results.
VW said later that it affected 11 million vehicles worldwide.
“I am clearing the way for a fresh start with my resignation,” Martin Winterkorn said in his statement.
He said he was “stunned” at the scale of the misconduct in the group but that he was confident that VW would overcome this “grave crisis”.
“The process of clarification and transparency must continue. This is the only way to win back trust,” he continued.
In a separate statement, VW’s supervisory board said they would announce Martin Winterkorn’s successor at a board meeting on September 25, adding that it was “expecting further personnel consequences in the next days” as a result of its own investigations.
“The internal group investigations are continuing at a high tempo,” it said.
“All participants in these proceedings that has resulted in unmeasurable harm for Volkswagen will be subject to the full consequences.”
The board also said that it would voluntarily submit a complaint to the state prosecutors.
“In the view of the Executive Committee criminal proceedings may be relevant due to the irregularities,” its statement said.
German public prosecutors have already said they are considering an investigation, with US authorities also said to be planning criminal investigations.
In addition, VW faces fines of up to $18 billion by the regulator, the Environmental Protection Agency (EPA).
VW’s shares have tumbled some 30% since the beginning of the week in response to the scandal.
According to new reports, world’s biggest automaker Volkswagen is facing multiple investigations in the US, including a criminal probe from the Department of Justice.
They follow an admission by the German carmaker that it deceived US regulators in exhaust emissions tests.
A DoJ criminal investigation would be serious, as federal authorities can bring charges with severe penalties against a company and individuals.
Late on Tuesday, September 22, New York state’s top lawyer announced an investigation.
New York Attorney General Eric Schneiderman said he would collaborate with other states to enforce consumer and environmental law.
“No company should be allowed to evade our environmental laws or promise consumers a fake bill of goods,” Eric Schneiderman said in a statement announcing the probe.
Meanwhile the Environmental Protection Agency (EPA) and the California Air Resources Board are investigating the way VW cheated tests to measure the amount of pollutants coming from its diesel cars.
VW said 11 million vehicles worldwide were involved and it was setting aside €6.5 billion to cover costs of the scandal.
According to news agencies Bloomberg and AFP, the DoJ is looking into the issue, which raises the possibility of the company and individual executives facing criminal charges.
However, the DoJ often extracts hefty payments from companies to settle criminal charges.
VW is due to hold a supervisory board meeting on September 25.
Reports say VW CEO Martin Winterkorn will appear before a select group of board members before then, possibly on September 23.
On September 22, Martin Winterkorn issued a fresh apology for the test-rigging, saying he was “endlessly sorry” for the “manipulation”.
The boss of Volkswagen’s US business, Michael Horn, has also admitted the company “totally screwed up”.
VW shares were down almost 17% on September 22 in Frankfurt, after losing 19% on September 21.
Volkswagen will “support” the German transport ministry’s investigation into the automaker’s emissions scandal, CEO Martin Winterkorn has said.
VW shares plunged more than 18% on September 21 after the Environmental Protection Agency (EPA) found that some of its cars could manipulate official emissions tests.
The EPA found that software in several diesel cars could deceive regulators.
VW was ordered to recall half a million cars in the US on September 18.
In addition to paying for the recall, VW faces fines that could add up to billions of dollars. There may also be criminal charges for VW executives.
The White House in Washington also reportedly said it was “quite concerned” about VW’s conduct.
Martin Winterkorn apologized after the scandal emerged.
“I personally am deeply sorry that we have broken the trust of our customers and the public,” he said.
He has launched an investigation into the software that allowed VW cars to emit less during tests than they would while driving normally.
The EPA found the “defeat device” in diesel cars including the Audi A3 and the VW Jetta, Beetle, Golf and Passat models.
VW has stopped selling the relevant diesel models in the US, where diesel cars account for about a quarter of sales.
The EPA said that the fine for each vehicle that did not comply with federal clean air rules would be up to $37,500. With 482,000 cars sold since 2008 involved in the allegations, it means the fines could reach $18 billion.
Volkswagen has ordered an external investigation, although it has not revealed who will be conducting it.
“We do not and will not tolerate violations of any kind of our internal rules or of the law,” Martin Winterkorn said.
The scandal comes five months after former VW chairman Ferdinand Piech left the company following disagreements with Martin Winterkorn.
“This disaster is beyond all expectations,” Ferdinand Dudenhoeffer, head of the Centre of Automotive Research at the University of Duisburg-Essen, said.
The VW board is due to meet on September 25 to decide whether to renew Martin Winterkorn’s contract until 2018, and some analysts speculated he may be on his way out.
VW had been promoting its diesel cars in the US as being better for the environment.
Class action law firm Hagens Berman is launching a suit against VW on behalf of people who bought the relevant cars.
“While Volkswagen tells consumers that its diesel cars meet California emissions standards, vehicle owners are duped into paying for vehicles that do not meet this standard and unknowingly pay more for quality they never receive,” Hagens Berman alleged.
Volkswagen has apologized after US regulators found some of its cars disguised pollution levels.
VW CEO Martin Winterkorn said: “I personally am deeply sorry that we have broken the trust of our customers and the public.”
He has launched an investigation into the device that allowed VW cars to emit less during tests than they would while driving normally.
The German automaker’s shares were down 19% in Frankfurt by lunchtime.
Volkswagen was ordered to recall half a million cars on September 18.
The Environmental Protection Agency (EPA) found the “defeat device” in diesel cars including the Audi A3, VW Jetta, Beetle, Golf and Passat models.
In addition to paying for the recall, VW faces fines that could add up to billions of dollars. There may also be criminal charges for VW executives.
The EPA said that the fine for each vehicle that did not comply with federal clean air rules would be up to $37,500. With 482,000 cars sold since 2008 involved in the allegations, it means the fines could reach $18 billion.
That would be a considerable amount, even for the company that recently overtook Toyota to be the world’s top-selling vehicle maker in the first six months of the year. Its stock market value is about €66 billion ($75 billion).
The company has stopped selling the relevant diesel models in the US, where diesel cars account for about a quarter of sales.
It has ordered an external investigation, although it has not revealed who will be conducting it.
“We do not and will not tolerate violations of any kind of our internal rules or of the law,” Martin Winterkorn said.
The German government said on September 21 it would rely on the US authorities to assess whether VW had done anything wrong in Europe.
“We expect the car companies to pass on reliable information so that the Federal Motor Transport Authority, the responsible authority in this case, can investigate whether similar manipulations took place with the emissions systems in Germany and Europe,” a spokesman for the German environment ministry said.
The scandal comes five months after former chairman Ferdinand Piech left Volkswagen following disagreements with Martin Winterkorn.
The VW board is due to meet on September 25 to decide whether to renew the chief executive’s contract until 2018.
“This disaster is beyond all expectations,” Ferdinand Dudenhoeffer, head of the Center of Automotive Research at the University of Duisburg-Essen, said.
VW had been promoting its diesel cars in the US as being better for the environment.
The US law firm Hagens Berman is launching a class-action suit against VW on behalf of people who bought the relevant cars.
The models cited by Hagens Berman are the diesel versions in the US of:
Jetta (2009 – 2015)
Beetle (2009 – 2015)
Audi A3 (2009 – 2015)
Golf (2009 – 2015)
Passat (2014 – 2015)
“While Volkswagen tells consumers that its diesel cars meet California emissions standards, vehicle owners are duped into paying for vehicles that do not meet this standard and unknowingly pay more for quality they never receive,” Hagens Berman alleged.
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