VW fined $4.3bn, investors demand more transparency
VOLKSWAGEN investors demanded greater transparency and reforms at the carmaker after it admitted to criminal offences in rigging US emissions tests and US prosecutors indicted six current and former managers over the scandal.
The German company agreed to pay $4.3 billion (R58bn) in civil and criminal fines in a settlement with the US Justice Department this week, the largest US penalty levied on a carmaker.
VW admitted about 40 employees at its VW and Audi brands deleted thousands of documents in an effort to hide from US authorities the systematic use of socalled defeat devices to rig diesel emissions tests, a scale of wrongdoing that led some investors to call for deep reforms.
“What is most disturbing… is the pattern of deception, both in developing and perfecting the defeat devices, as well as deliberately obstructing the subsequent investigation,” said Annie Bersagel, an adviser for responsible investments at Norwegian Mutual Insurance firm Kommunal Landspensjonskasse (KLP). KLP and KLP mutual funds have investments in VW equities and fixed income products.
“Going forward we would like to see more truly independent directors. This may change governance at the company where we see some issues… We would like to see a clawback provision relating to violations.”
So far, the scandal has cost VW up to $22bn in the US alone, in deals with owners, regulators, US states and dealers. Despite the fines, VW has continued to pay bonuses to top managers.
For 2015 VW agreed to pay 12 current and former members of the management board a total of 63.2 million (R908m) in fixed and flexible remuneration. It said board members would have 30percent of their variable bonus awards withheld, if the share price remained below 140.
VW shares are trading 151.89.
Six current and former VW managers have been indicted, including Heinz-Jakob Neusser, the former head of development for the VW brand. Five of them are in Germany and it is unclear if they will come to the US to face charges since Germany typically does not extradite its citizens.
US attorney general Loretta Lynch said US authorities would continue to pursue those responsible for emissions cheating.
VW’s chief executive Matthias Mueller said the company “deeply regrets the behaviour that gave rise to the diesel crisis” and vowed to continue changes in how the company operated. – Reuters