Ger­many charges VW bosses over diesel emis­sions scan­dal

The Morning Call - - BUSINESS CYCLE - By Geir Moul­son and David McHugh

BER­LIN — German pros­e­cu­tors dealt a blow to Volk­swa­gen’s ef­forts to put the 2015 emis­sions-cheat­ing case be­hind it, charg­ing the au­tomaker’s chief ex­ec­u­tive, chair­man and for­mer CEO with stock ma­nip­u­la­tion for not telling in­vestors at the time that the scan­dal was about to break.

The charges an­nounced Tues­day could pose a ma­jor dis­trac­tion for CEO Her­bert Diess as he pushes ahead with the com­pany’s shift to­ward zero-emis­sions ve­hi­cles and a new, more en­vi­ron­men­tally friendly im­age.

Diess, Chair­man Hans Di­eter Poetsch and for­mer CEO Martin Win­terkorn were ac­cused of de­lib­er­ately in­form­ing mar­kets too late about the huge costs to VW that would re­sult from the scan­dal, which erupted when reg­u­la­tors dis­cov­ered that mil­lions of diesel cars had been fit­ted with soft­ware de­signed to thwart pol­lu­tion tests.

Win­terkorn was pre­vi­ously charged in the scan­dal. Poetsch and Diess had not faced charges un­til now.

Volk­swa­gen called the new al­le­ga­tions “ground­less” and threw its sup­port be­hind Poetsch and Diess. But the case could re­quire Diess to spend time on his de­fense at a cru­cial time for the com­pany.

Just days ago, Diess stood on stage at the Frank­furt Mo­tor Show with the com­pany’s new bat­tery-pow­ered ve­hi­cle, the ID.3, and showed off a new ver­sion of the VW logo to un­der­score the au­tomaker’s trans­for­ma­tion.

The new car is aimed at bring­ing zero-emis­sions driv­ing to the masses. The ve­hi­cle is sup­posed to be car­bon-diox­ide neutral through­out its pro­duc­tion chain.

Tido Park, a lawyer for Diess, told German news agency dpa that the in­dict­ment won’t pre­vent Diess from per­form­ing his du­ties as CEO.

Pros­e­cu­tors said Win­terkorn knew of the im­pend­ing scan­dal and the po­ten­tial fi­nan­cial dam­age since at least May 2015, Poetsch since late June of that year, and Diess since late July, less than a month af­ter he be­came head of the com­pany’s VW brand.

The scan­dal broke when the U.S. En­vi­ron­men­tal Pro­tec­tion Agency went pub­lic with it in mid-Septem­ber 2015. That led to a drop in the au­tomaker’s stock.

The charges could bring up to five years in prison, au­thor­i­ties said.

Win­terkorn re­signed shortly af­ter the scan­dal erupted. Poetsch was chief fi­nan­cial of­fi­cer at the time and be­came chair­man in late 2015. Win­terkorn was suc­ceeded as CEO by Matthias Mueller, who was then re­placed by Diess in April 2018.

Volk­swa­gen stock fell about 2 per­cent af­ter the news.

THOMAS KIENZLE/GETTY-AFP

Volk­swa­gen called the new al­le­ga­tions Tues­day against VW Chair­man Hans Di­eter Poetsch, left, for­mer CEO Martin Win­terkorn and CEO Her­bert Diess “ground­less.”

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