“Dieselgate”: VW managers have to answer in court
Seldom before has an economic scandal in Germany caused such great financial damage as the emissions crisis. After years of preparation and multiple postponements, the criminal case against several senior ex-managers at Volkswagen is set to begin on Thursday, September 16, 2021. The allegations weigh heavily: It is about commercial and gang fraud with manipulated software in millions of cars. While driving, these encountered a multiple of the permitted values for harmful nitrogen oxides (NOx) the end. Better cleaning technology would have been expensive.
VW has equipped millions of engines with software to manipulate the measurement of pollutant emissions. The scandal was triggered by an investigation by the US environmental agency.
One of the defendants is the former CEO Martin Winterkorn. The Braunschweig regional court will decide shortly whether he has to appear in person at the start of the trial. Due to health problems, his part could be separated and postponed again. It would be realistic that, given the time pressure, the chamber would open the main hearing against at least four other accused executives.
It has been almost six years to the day that “Dieselgate” was exposed in the USA. The environmental agency CARB got the ball rolling when it sent a letter to VW representatives in the country on September 18, 2015. In it, the supervisors of Europe’s largest carmaker – at that time actively promoting the “clean diesel” – complained about non-compliance with emission regulations, which must be corrected quickly. Scientists had already given indications of irregularities in the exhaust system beforehand. But those responsible for VW did not take inquiries very seriously, even when it came to vehicle recalls.
Then everything suddenly happened very quickly. Winterkorn stepped back, struggling to maintain his composure, he said goodbye to the staff. He was “not aware of any wrongdoing,” said the highest-paid manager of all Dax companies. Links to the fake NOx– He later also denied values. Attorney Felix Dörr explained: “Mr. Winterkorn had no early knowledge of the targeted use of prohibited engine control software.” He also protested his innocence before the Bundestag investigative committee.
Long investigations and detention by the public prosecutors
Law enforcement officers see it differently. The Braunschweig public prosecutor’s office sifted through huge data sets, heard many witnesses, and exchanged views with US colleagues. The result a good two years ago: the fraud charge that the regional court is now negotiating. Across the Atlantic, VW also made an admission of guilt to the Ministry of Justice in addition to comparing billions with customers. The role of individual managers is an additional topic; an arrest warrant has even been issued against Winterkorn.
In this country, the legal processing of compensation for consumers or investors is already advanced. When it comes to criminal aspects, it is still at the beginning. The Braunschweig court, which initially booked the town hall because of the expected public interest, is preparing for a long process. The provisional schedule extends until spring 2023.
The preparation had already dragged on. The start had to be postponed twice due to the uncertain Corona situation. The court also had the public prosecutor’s office detained; it wanted some points of the indictment to be explained and justified in more detail. However, it later exacerbated the allegations. There is a suspicion that Winterkorn and the other defendants enabled or at least tolerated the use of the exhaust gas deception programs.
When and how often does the ex-boss have to sit in the dock?
It remains to be seen whether Winterkorn can appear in the hall on all important negotiating days – regardless of when the opening will be made against him. According to information from his environment, regular participation would currently be difficult. The chamber was advised by an expert on the condition of the 74-year-old. Winterkorn lives in Munich, he would have to commute regularly to Braunschweig or possibly stay in the city during the central trial weeks.
Meanwhile, the discussion with his old employer seems to have ended. In June, following internal investigations by a specialist law firm, VW concluded a compensation deal with Winterkorn and liability insurers. It is about violations of obligations under company law – the lawyers commissioned found indications of negligence, but not of intent. The ex-boss pays 11.2 million euros to VW. The total is over 280 million euros, it also includes claims to ex-Audi boss Rupert Stadler and ex-managers Wolfgang Hatz and Stefan Knirsch.
The Greens in Lower Saxony criticized the fact that the SPD / CDU state government, as the representative of the second largest VW shareholder, supported the private settlement before the court could enter into the public taking of evidence. The resolution of the VW general meeting is now also being challenged.
The “damage table” – and its consequences
Either way, a lot in the VW fraud process is likely to revolve around the ominous “damage table” of several managers on July 27, 2015. In addition to Winterkorn, today’s CEO Herbert Diess, fresh from BMW at the time, was there. There were investigations against him and chief controller Hans Dieter Pötsch for alleged market manipulation, but the proceedings were discontinued in return for payment of 9 million euros.
In such crisis rounds, the managers discussed problems that they heard from locations around the world. It remains to be seen whether the fraudulent software was discussed at the time – and if so, how deeply. The VW supervisory board believes that “Winterkorn has violated his duty of care by failing to explain the background to the use of impermissible software functions in 2.0-liter TDI diesel engines that occurred in 2009 until 2015 were sold in the North American market to clarify immediately and comprehensively “.
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Before that, however, according to the previous official account, a maximum of employees below the highest management level should have been privy to the details. Winterkorn himself had stated that he was only briefly put into the picture. The flow of information was inadequate. The Berlin public prosecutor’s office questioned parts of similar statements in the U-Committee of the Bundestag and accused Winterkorn of false testimony. This point is also to be checked in Braunschweig.
Between carelessness and intent
Whether the behavior of the VW top management at the time is to be regarded as carelessly risky or possibly as an intentional omission should take up more space in court. Who said what exactly at the “damage table” and for what purpose has so far remained under lock and key. The public prosecutor’s office in Braunschweig meanwhile sued other executives of the group as well as a supplier, among other things for aiding in fraud and indirect false certification.
Volkswagen wants to learn from the crisis. The management installed new rules for good corporate governance, and a whistleblower system should help to uncover possible misdeeds. Because of the “diesel issue”, as the affair is sometimes still belittled internally, over 32 billion euros in legal costs alone have been accrued or deferred so far.
In addition, the loss of confidence in sales ultimately had little impact. The group continues to earn well, Diess relies almost everything on electromobility. In the wake of the VW scandal, however, other manufacturers also had suspicions about exhaust gas purification.
(olb)