Volkswagen to seek damages from former CEOs over Dieselgate

The board Friday announced its decision to assert claims for damages based on expert opinion that concluded negligent breaches of duty had occurred. Both Stadler and Winterkorn breached duty of care under stock corporation law, according to the board.

A public statement from Winterkorn in September 2015 expressed shock toward the German auto giant’s decade-long scheme to install defeat device software into 16 Volkswagen, Audi, and Porsche diesel models between model years 2009-2016. The undisclosed software was designed to cheat U.S. emissions standards. In testing mode, the tampered vehicles’ software produced compliant results; outside a testing environment, the software caused the emission control system to underperform, resulting in increased pollution up to 40 times above permitted levels, U.S. officials said.

Volkswagen’s Dieselgate scandal, as it is now known, dates to the early 2000s, when documented discussions were first known to have cropped up. The scandal came to a head in summer 2015, when the U.S. Environmental Protection Agency (EPA) threatened not to approve certificates of conformity for Volkswagen’s 2016 vehicles unless the company confessed to wrongdoing. “Only then did VW admit it had designed and installed a defeat device in these vehicles,” the EPA’s notice of violation stated on Sept. 18, 2015.

Winterkorn’s statement of resignation came one week later. “I am doing this in the interests of the company even though I am not aware of any wrong doing [sic] on my part,” he included.

Volkswagen’s supervisory board said Friday that Winterkorn had knowledge of the cheating scheme from July 27, 2015, onward and that the former CEO failed to clarify the facts behind the defeat device software and ensure U.S. authorities’ questions were answered “truthfully, completely, and honestly.” Volkswagen had been engaged in back-and-forth discussions with the California Air Resources Board, in coordination with the EPA, for 16 months prior to coming clean. During that time, the automaker continually dodged the regulators’ technical questions to obstruct them from the truth.

Although Winterkorn has maintained his ignorance, the former CEO was indicted by a federal grand jury in the Eastern District of Michigan for conspiracy and wire fraud connected to the emissions cheating scandal in May 2018. Winterkorn remains a fugitive of justice in the United States today. In April 2019, German authorities filed aggravated fraud charges against Winterkorn.

Former New York Attorney General Eric Schneiderman in a Netflix documentary suggested Winterkorn might have been aware of the scandal as early as 2006.

As for Stadler, Volkswagen’s supervisory board also concluded the former Audi CEO breached his duties of care from Sept. 21, 2016, onward by failing to investigate internally whether Audi engines used in EU vehicles of Volkswagen, Audi, and Porsche contained illegal software. Overall, the number of vehicles sold worldwide with illicit software installed reached roughly 11 million.

Volkswagen’s internal investigation involved a screening of approximately 1.6 million relevant files and 1,550 interviews. The commissioned team from German law firm Gleiss Lutz also reviewed prosecutorial investigation files, official and judicial proceedings worldwide, and reports by the U.S. independent compliance monitor, former U.S. Deputy Attorney General Larry Thompson.

Thompson and his team of anti-fraud, ethics, and compliance experts carried out a three-year monitorship with the German automaker, working closely with Volkswagen’s Head of Integrity and Legal Affairs Hiltrud Werner, Chief Compliance Officer Kurt Michels, and former Chief Coordinator for the U.S. Monitorship Dr. Thomas Meiers, among many others. Thompson certified the automaker satisfactorily implemented an effective compliance program and fulfilled the conditions of its 2017 plea agreement with the U.S. Department of Justice in September 2020.

Compliance Week’s case study on Volkwagen’s successful completion of the U.S. monitorship is due out in April.

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