EMISSIONS SCANDAL FALLOUT
German prosecutors are investigating Volkswagen CEO Matthias Mueller on suspicion of market manipulation,
FRANKFURT, GERMANY— Volkswagen’s emissions scandal reached deep into the company’s boardroom Wednesday after German prosecutors said they were investigating Matthias Mueller, the carmaker’s chief executive, on suspicion of market manipulation.
It is the first time that Mueller has been officially identified as a suspect in the scandal, which has already cost Volkswagen tens of billions of dollars in settlements and fines after the carmaker installed software known as a “defeat device” in diesel vehicles to help them bypass emissions standards.
The state attorney’s office in Stuttgart, in southwestern Germany, also confirmed that it was investigating Hans Dieter Poetsch, chairperson of Volkswagen’s supervisory board, and Martin Winterkorn, the automaker’s former chief executive. The criminal investigation, which has been underway since February but announced for the first time Wednesday, is based on a complaint from the Federal Financial Supervisory Authority, or BaFin.
Whether top-echelon managers knew of the emissions cheating, and if so, when, has major implications for Volkswagen’s finances. Volkswagen and Porsche Automobil Holding SE shareholders in Europe and the United States have sued, claiming that members of the management board neglected their duty to warn of risks that could affect the share prices. Porsche SE is a publicly listed company that controls a majority of Volkswagen shares.
By some estimates, the lawsuit could cost Volkswagen $10 billion (U.S.) if the shareholders prove in court that top managers knew of the illegal behaviour sooner than they have admitted.
The suits also threaten the Porsche and Piech families, descendants of Ferdinand Porsche, inventor of the Volkswagen Beetle.
The families’ wealth is tied up in Porsche SE.
Volkswagen has already agreed to pay criminal and civil penalties of $4.3 billion under the terms of a plea agreement with U.S. authorities, a piece of the overall $22 billion in settlements and fines in the United States. So far six executives have also been charged in the United States, and one engineer has pleaded guilty to conspiring to defraud regulators and car owners.
On Wednesday, prosecutors said they were investigating whether Mueller improperly withheld infor- mation about the emissions scandal from shareholders of Porsche SE before news of the deception became public in September 2015.
In a statement, Stuttgart prosecutors said that Mueller, Winterkorn and Poetsch were suspected of “knowingly failing to communicate in time the consequences arising from manipulation of software in Volkswagen diesel vehicles, especially financial consequences for Porsche SE.”
In addition to his duties at Volkswagen, Mueller is a member of Porsche SE’s management board. Poetsch is also a member of the Porsche SE management board and Winterkorn is a former member.
The holding company is controlled by members of the Porsche and Piech families, but it is subject to stock market regulation because it also has publicly traded preferred shares which do not have voting rights but are entitled to dividends.
“Porsche SE considers the accusations to be groundless,” the company said in a statement, adding that it “has properly fulfilled its disclosure obligations under capital markets law.”
Poetsch and Winterkorn had already been identified in a related investigation into market manipulation involving Volkswagen shares. Mueller has not been identified as a suspect in that inquiry, which is being conducted by prosecutors in Braunschweig, a city near Volkswagen’s headquarters in Wolfsburg, in northern Germany.
Herbert Diess, a member of the Volkswagen management board in charge of Volkswagen brand cars, has also been named as a suspect in the Braunschweig market manipulation case.
Winterkorn resigned as chief executive of Volkswagen in September 2015 after the U.S. Environmental Protection Agency accused the company of using engine software to conceal excess emissions by diesel cars. He was replaced by Mueller, a longtime Volkswagen executive who had previously been in charge of the Porsche sports car division.
Volkswagen declined to comment, but repeated assertions that the company’s executives had fulfilled their duties to shareholders.