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Germany Launches Criminal Probe Against VWs exCEO

Germany Launches Criminal Probe Against VW's ex-CEO

Sept. 29, 2015
In addition to Germany, national authorities in several other countries have announced probes. And lawsuits are being filed, including class-action suits in the United States. 

FRANKFURT - German prosecutors on Monday announced a criminal probe against Volkswagen's former boss Martin Winterkorn as VW group carmakers Audi and Skoda said more than three million of their vehicles were fitted with software designed to dupe emission tests.

The German government piled on the pressure by urging the embattled auto giant to outline by October 7 how it planned to resolve the crisis that broke after Volkswagen revealed that 11 million of its diesel vehicles worldwide are equipped with so-called defeat devices.

In the latest fallout from the scandal, a Dutch distributor suspended sales of Volkswagen cars while Swiss authorities said there were nearly 130,000 cars with the devices in the Alpine nation.

Volkswagen's top-of-the-range automaker Audi said that 2.1 million of its diesel cars worldwide are affected, as are another 1.2 million vehicles of VW's Czech subsidiary Skoda.

A spokesman for Volkswagen's light commercial vehicles business said 1.8 million of its light utility vehicles were also similarly equipped, German newspaper Hannoverschen Allgemeinen Zeitung reported.

The VW drama will be high on the agenda when the European Union's 28 trade or industry ministers gather in Luxembourg this week.

In Germany, public prosecutors in the northern city of Brunswick said they had launched a criminal probe against 68-year-old Winterkorn, who resigned as VW's CEO last week claiming he was "not aware" of having done anything wrong.

The carmaker's supervisory board also appeared to absolve him initially, insisting that Winterkorn -- who as Germany's highest-paid executive could under normal rules stand to pocket a payout of around 60 million euros (US $67 million) -- had been oblivious of the fraud.

Chain of responsibility 

But prosecutors said they were looking to establish the exact chain of responsibility in the scam, which is snowballing into one of the biggest ever in the European automobile industry and threatening to tarnish Germany's pristine engineering reputation.

"Following a number of legal suits, the public prosecutors in Brunswick have opened an investigation against Martin Winterkorn," they said in a statement.

"The investigation will focus on the allegation of fraud by selling vehicles with manipulated emission values," it added. The devices can switch on pollution controls when they detect the car is undergoing testing. They then switch off the controls when the car is on the road, allowing it to spew out harmful levels of emissions.

VW on Friday announced it was replacing Winterkorn with the head of luxury sports car brand Porsche, Matthias Mueller. The new 62-year-old boss faces the daunting challenge of trying to steer VW out of the wreckage left by the scandal, which has wiped a third off the company's stock market value in a week.

Ignored warnings  

According to German media reports at the weekend, Volkswagen ignored warnings from staff and a supplier years ago that the test-rigging software was illegal. 

Swiss authorities meanwhile said nearly 130,000 cars from the Volkswagen stable equipped with the dodgy software were on its roads. They were Audi, Seat, Skoda and Volkswagen models built between 2009 and 2014.    

In addition to Germany, national authorities in several other countries have announced probes. And lawsuits are being filed, including class-action suits in the United States. 

VW's diesel vehicles are coming under close regulatory scrutiny worldwide and France has even extended the checks to cars made by other manufacturers. 

VW was not immediately available on Monday to comment on the news of the criminal investigation against Winterkorn, or media reports suggesting the group had suspended a number of managers in its R&D division. 

With the carmaker facing the possibility of having to recall as many as 2.8 million vehicles in Germany alone, the direct and indirect costs of the affair are still incalculable. 

VW has already said it will set aside 6.5 billion euros in provisions in the third quarter. But analysts at DZ Bank suggested it could be 1.0-3.0 billion euros more. 

On top of that sum, VW also faces onerous regulatory fines, including up to $18 billion in the United States. And the fallout on customer purchases cannot yet be estimated.

Simon Morgan - AFP

Copyright Agence France-Presse, 2015

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