Sat | Jul 20, 2019

Former Volkswagen CEO charged with fraud

Published:Tuesday | April 16, 2019 | 12:17 AM
Martin Winterkorn, former CEO of German car manufacturer Volkswagen.
Martin Winterkorn, former CEO of German car manufacturer Volkswagen.

German prosecutors have charged former Volkswagen CEO Martin Winterkorn and four others with fraud and other offences in connection with the company’s massive, multi-year effort to cheat on diesel emissions testing.

Prosecutors said Monday that Winterkorn knew about the deceptive practice since at least May 2014, and failed to put a stop to it. That contradicted Winterkorn’s claim that he did not learn of the problem until shortly before US investigators announced it in September 2015. Winterkorn resigned as CEO days later.

The prosecutors said in a statement that the defendants – all of them top Volkswagen managers – were part of an ongoing deception that started in 2006.

The company has admitted installing software that could tell when the cars were on test stands for emissions certification. When the cars went on to everyday driving, the emission controls were turned off, improving performance but emitting far more than the US legal limit of nitrogen oxides, a class of pollutant that is harmful to health.

In all, some 11 million cars worldwide were equipped with the illegal software, in a case that damaged the reputation of diesel technology and accelerated the shift to electric cars in Europe.

The prosecutors added that defendants carried out a software update costing €23 million in 2014 in an attempt to cover up the true reason for the elevated pollution emissions during regular driving.

The 71-year-old Winterkorn and the others face from six months to 10 years’ imprisonment if convicted on charges of aggravated fraud involving serious losses. Other charges include unfair competition and breach of trust.

Prosecutors said bonuses collected due to sales based on the deception could be forfeited. Prosecutors said the bonuses in question ranged from around €300,000 to €11 million (US$340,000 to US$12.45 million).

Winterkorn’s attorney, Felix Doerr, said the defence could not comment because prosecutors had not provided adequate opportunity to review the case files. Doerr said in a statement that prosecutors had turned over seven DVDs with 300 file folders of material, including data files that the defence had not seen before, April 5 and that requests for a chance to review the files and make a written answer had received no response.

Diesel sales, once half the European car market, have sagged since the emissions scandal.

That, in turn, has undermined carmakers’ plans to use diesels – which get better mileage – to help meet tougher European Union limits from 2021 on emissions of carbon dioxide, the main greenhouse gas blamed for global warming. One result has been greater pressure to develop battery-powered cars to avoid heavy fines for breaching the new emissions limits.

Volkswagen says it plans to spend €30 billion to develop electric vehicles by 2023.

AP