German prosecutors are pressing criminal charges against the CEO, chairman, and a former CEO of Volkswagen, saying they delayed telling investors about the carmaker’s cheating of U.S diesel emissions tests.
Prosecutors in the city of Braunschweig said on Tuesday they aimed to charge Volkswagen Chief Executive CEO Herbert Diess, Chairman Hans Dieter Poetsch and former CEO Martin Winterkorn with stock market manipulation.
Four years after the German company admitted using illegal software to cheat U.S. diesel engine tests, the charges show it is still struggling to move on from a scandal which has cost it more than $30 billion in vehicle refits, fines and provisions.
Court proceedings are underway over that admission from September 2015. The indictment from the prosecutors in Braunschweig - in Volkswagen’s home region of Lower Saxony - is part of a separate legal push to try managers over allegations they delayed disclosing the scandal to investors.
The Executive Committee of the Supervisory Board of Volkswagen said that there are the following specific aspects that speak against the charge of market manipulation:
- The substantial decrease in the share price of the VW share after publication of the Notice of Violation on 18 September 2015 is due to the fact that the US authorities published their allegations completely unexpectedly during ongoing discussions with Volkswagen.
- The Board of Management of Volkswagen AG could not foresee this change in the approach of the US authorities.
- In this respect, the Board of Management could rely on the legal advice of the renowned US law firm Kirkland & Ellis. On the basis of Kirkland & Ellis’s advice, it was to be assumed until the publication of the Notice of Violation that, as was the customary practice until then, a mutually agreed solution would first be worked out with the US authorities and then presented to the public in a joint statement.
"Based on the findings available, the 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," Volkswagen's board said.