VW Executives From Dieselgate Era Formally Charged With Stock Market Manipulation
The emissions scandal has cost Volkswagen more than $30 billion since 2015.
German prosecutors announced charges against three top Volkwagen executives on Tuesday, including current CEO Herbert Diess, accusing each individual of stock market manipulation during the dieselgate scandal.
Diess faces charges alongside VW board chairman and former CFO Hans Dieter Pötsch, in addition to former CEO Martin Winterkorn. Prosecutors allege that the trio are responsible for failing to properly warn investors about the drawn-out emissions scandal with roots as far back as 2015. As a result, authorities say that shareholders were ill-informed of the financial impact that the company would face in the coming years.
Volkswagen, however, refutes the allegations against its current and former executives.
“The company has meticulously investigated this matter with the help of internal and external legal experts for almost four years. The result is clear: the allegations are groundless,” said Volkswagen board member Hiltrud Dorothea Werner in a statement to the Washington Post. “Volkswagen AG therefore remains confident that it has fulfilled all its reporting obligations under capital markets law. If there is a trial, we are confident that the allegations will prove to be unfounded.”
The allegations of market manipulation mark the second set of indictments from German prosecutors against former CEO Martin Winterkorn this year. In April 2019, authorities indicted Winterkorn and four other individuals in connection with dieselgate-related charges. These charges were compounded against the mounding stack of legal battles that Winterkorn had suddenly found himself in the center of, including a civil suit filed by the United States Securities and Exchange Commission exactly one month earlier over dieselgate-era fraud allegations.
Lawyers for Winterkorn and Pötsch have reportedly made statements indicating that their clients are free of blame. Attorneys representing Pötsch, who was CFO when dieselgate unfolded, argued that it was implausible for him to know the future financial impact of the scandal, nor that the emission cheating was deliberate. Winterkorn claims to have not known about the defeat devices until the automaker broke the news publicly.
Diess' lawyers also denied any wrongdoing on the CEO's behalf and indicated to Bloomberg that he had no plans of changing his role within the company.
Just two months after Diess took the reigns as CEO of Volkswagen, the United States Environmental Protection Agency discovered that Volkswagen had been installing emissions defeat devices in its vehicles for a number of years which gave the illusion that its diesel-powered vehicles were complying with pollution regulations. During real-world tests, however, the vehicles emitted pollutants more than 40 times the legal limit.
As of mid-2019, Volkswagen revealed that the scandal had cost the company upwards of $33 billion (30 billion Euros) with another $1.1 billion set aside in reserve for ongoing legal costs.