Volkswagen scandal widens to top levels
FRANKFURT, Germany — The investigation into emissions fraud at Volkswagen reached the very top of the company on Sunday after the carmaker said that the chairman of the supervisory board, Hans Dieter Poetsch, is suspected by German prosecutors of violating securities laws.
Poetsch, the former chief financial officer at Volkswagen, is suspected of failing to notify shareholders quickly enough of the financial risks of the diesel emissions cheating scandal, which has already led to a $15 billion settlement in the United States and caused the stock price to plunge.
The disclosure that Poetsch is the subject of an investigation is likely to intensify criticism that Volkswagen remains in the hands of many of the longtime insiders who were in charge while the company was producing millions of cars that were deliberately designed to cheat on airquality tests. More than a year after the company was accused of wrongdoing, the scandal is still widening and the damage to Volkswagen’s finances and reputation continues to expand.
U.S. investigation ongoing
The investigation of Poetsch could also provide ammunition to investor groups and mutual funds that are suing Volkswagen in the United States and Germany. The suits claim that Volkswagen managers were aware of the impending scandal and failed to notify shareholders as required by law. The suits could cost the company additional billions of euros.
A confidant of the Porsche and Piech families who own a majority of Volkswagen’s voting shares, Poetsch was elevated to chairman of the supervisory board in October 2015. That was a few weeks after the Environmental Protection Agency accused the carmaker of manipulating engine software to conceal illegally high levels of nitrogen oxide emissions.
Poetsch had been the chief financial officer of Volkswagen since 2003 and a member of the company’s management board. As chairman of the supervisory board, Poetsch oversees the management board.
In a statement, Volkswagen said that its management board “duly fulfilled its disclosure obligation under German capital markets law.”
Volkswagen is also under investigation in the United States, not only for programming cars to cheat but also for orchestrating an elaborate cover-up starting in early 2014 after tests first cast doubt on what the company claimed were “clean diesel” cars.
In fact, the Volkswagen cars emitted as much as 40 times the permitted levels of nitrogen oxides, a family of gases that can cause health problems including asthma and cancer.
Nitrogen oxides also contribute to global warming and acid rain, and are a leading cause of smog that chokes cities like Los Angeles.
‘Lied through their teeth’
Volkswagen engineers went so far as to concoct fake engineering data to try to explain a huge discrepancy between the readings in official laboratories and how much the cars polluted on the road, said Alberto Ayala, deputy executive officer of the California Air Resources Board, which did much of the detective work that led to Volkswagen’s exposure.
“They lied through their teeth,” Ayala said in an interview in California last month.
The cover-up, which lasted more than a year, ultimately raised the cost of the scandal to Volkswagen. It has not been able to take advantage of lower financial penalties normally available to corporate wrongdoers who are forthcoming with information and who swiftly take disciplinary action against the responsible employees.
Volkswagen has portrayed the malfeasance as the work of midlevel engineers and managers acting without knowledge of top management. But that position has become difficult to defend as more information becomes available from court documents.
Lawsuits against Volkswagen by car owners as well as state attorneys general portray a vast conspiracy involving hundreds of Volkswagen employees as well as suppliers like Robert Bosch, the German company that manufactured engine computers for affected vehicles in the United States.