Daily Management Review

German Prosecutors Bring Market Manipulation Charges Against VW Top Executives


09/25/2019




German Prosecutors Bring Market Manipulation Charges Against VW Top Executives
Charges of manipulating the market in connection to the diesel emissions scandal that had rocked the German auto giant Volkswagen have been brought against three current and former executives of the company.
 
According to the charges filed by German prosecutors, investors were not informed about the financial fallout of the diesel scandal early enough by Chief executive Herbert Diess, chairman Hans Dieter Pötsch and ex-boss Martin Winterkorn. In 2015, the company conceded that it had used cheat software to pass stringent diesel emission tests in the United States, Europe and elsewhere. 
 
It was confident the allegations would prove groundless, said VW. The lawyers of the company said that Diess will continue to be chief executive of the company.
 
"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," the German company said in a statement to the media.
 
Allegations against their clients are baseless, claimed the lawyers for both Winterkorn and Pötsch. On the other hand, the strong argument presented by Diess's lawyer is that he had not joined the company before 2015 and therefore he did not have any idea about the extent and scope of the diesel emission scandal.
 
The first reports about the diesel emission scam done by VW emerged in September 2015 from the United States and the company had conceded back then the as much as 600,000 cars that had been sold by the company in the United States had been fitted with "defeat devices" that were capable of cheat through stringent diesel emission tests. The company later also admitted that between 2009 and 2015, it had sold millions of cars with similar cheating software all across the world.
 
After the emergence of the scandal, the then CEO of the company Winterkorn, was forced to resign. Diess joined the company after that in 2015 and became the CEO later on.
 
This is the second indictment in Germany by prosecutors in relation to the diesel scandal. IN April, prosecutors had brought in charges of fraud against Winterkorn and three other VW managers. Winterkorn was accused by prosecutors of a "particularly serious" fraud, as well as a breach of competition laws in a statement on that case. Prosecutors had said then that car owners and authorities in the US and Europe should have been alerted by the former chief executive and informed them about the use of the cheat software designed to bypass emission tests. The executive was also accused by prosecutors of approving a "useless" software update which was aimed to cover up the actual reason for the higher emission levels of cars.
 
A month earlier, Volkswagen and Winterkorn were sued by the US Securities and Exchange Commission (SEC). According to the charges brought in by the SEC, the company had issued billions of dollars worth of bonds and securities but failed to disclose the cheating of emission tests and had thereby misled the investors. 
 
(Source:www.cnbc.com)






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