Ex-chief of VW indicted in U.S.
The Volkswagen emissions scandal reached the highest echelons of the company on Thursday after its former chief executive was charged with taking part in its yearslong conspiracy to rig diesel vehicles to feign compliance with federal pollution standards.
The indictment of the former executive, Martin Winterkorn, who resigned shortly after the emissions scandal erupted in September 2015, significantly raises the stakes for Volkswagen.
The charges contradict the German carmaker’s steadfast insistence that no members of its management board were involved in the emissions fraud, and weaken the company’s defense in a related suit by shareholders — potentially adding billions of dollars to the scandal’s already astronomical cost.
The grand jury indictment, unsealed on Thursday in U.S. District Court in Detroit, added Winterkorn’s name to five other defendants who were charged more than a year ago.
Winterkorn is believed to be in Germany, which does not normally extradite its own citizens. He has repeatedly denied wrongdoing, including in testimony before the German Parliament.
But the U.S. case probably increases the chances that Winter-
korn will face charges in Germany. Prosecutors there are conducting their own wide-ranging investigation, which included a raid on offices of the company’s Porsche division last month.
Last year, Volkswagen pleaded guilty to federal charges that included conspiracy to violate the Clean Air Act and paid a $2.8 billion criminal penalty. But the company blamed the wrongdoing on lower-level managers and maintained that no members of its top management had been involved.
If it is proven that Winterkorn, 70, was a party to the conspiracy, Volkswagen would be significantly more vulnerable to lawsuits brought by shareholders who accuse top managers of shirking their obligation to inform them of the risks the company was taking. The shareholders are seeking some $10 billion in damages, which would be on top of the roughly $26 billion in fines and civil damages that the carmaker has already paid.
According to the indictment, Winterkorn was informed in early 2014 that U.S. regulators were asking why Volkswagen diesel vehicles had produced low emissions during laboratory tests but drastically higher emissions on the road.
The indictment said that Winterkorn had approved plans to conceal from regulators the true reason for the discrepancies: The cars were equipped with software, known as a defeat device, that could detect when emissions tests were underway.
If the car was being tested, it deployed equipment to keep emissions within legal limits. At other times, the pollution controls were disabled or only partly deployed to protect components from wear.
Winterkorn and the other five defendants, all managers who worked in engine development, are accused of conspiring to defraud the U.S. government in its enforcement of pollution standards under the Clean Air Act, and conspiring to commit wire fraud and to violate the Clean Air Act itself.
Winterkorn and the others were part of a scheme to “unlawfully enrich VW and themselves,” according to the indictment.
In pleading guilty to felony charges last year, Volkswagen admitted that it had illegally imported nearly 600,000 vehicles equipped with defeat devices. It paid $4.3 billion in penalties and was put on probation for three years, with a former federal prosecutor, Larry Thompson, overseeing its compliance with ethics and regulatory measures.
A former Volkswagen manager in Michigan, Oliver Schmidt, was sentenced in December to seven years in prison for his role in the scheme, which has tainted the company’s reputation.
Winterkorn, known as an unforgiving boss who loudly berated subordinates who failed to meet his standards, was Volkswagen’s chief executive for eight years.
Earlier Thursday, Volkswagen’s new CEO, Herbert Diess, vowed to build a more ethical culture and outlined a new structure aimed at streamlining decision-making at the sprawling company.
Diess was addressing his first shareholder meeting since taking over as CEO from Matthias Mueller on April 12.
The company also was widely criticized for conducting experiments in which monkeys were exposed to diesel fumes in an unsuccessful attempt to prove the diesel technology was safe.
Board chairman Hans Dieter Poetsch condemned the monkey experiments in his speech. He said they were under investigation and “in no way comprehensible.”