Volkswagen to Seek Damages From Former CEO Winterkorn in Diesel Scandal
27 March 2021 - 3:20AM
Dow Jones News
By William Boston
BERLIN -- Volkswagen AG said it would seek compensation from
former CEO Martin Winterkorn and the former CEO of its Audi luxury
car unit, Rupert Stadler, for damages suffered in the wake of the
diesel scandal that has cost the German car maker more than $35
billion in damages and fines.
The decision to seek damages from the former long-serving
executives most closely identified with the scandal caps an
internal investigation that began six years ago when U.S.
authorities charged Volkswagen with conspiracy to commit fraud,
making false statements on goods brought for sale in the U.S. and
obstruction of justice. The U.S. probe uncovered a decadelong ploy
by Volkswagen to rig millions of diesel-powered vehicles to cheat
emissions tests and later attempt to cover up the cheat.
The diesel scandal, one of the largest frauds by a European
company in recent history, resulted in the company pleading guilty
in 2017 in the U.S. to settle criminal charges for around $4.3
billion. The company also agreed to pay hundreds of thousands of
U.S. owners of Volkswagen and Audi vehicles billions of dollars in
compensation.
When the fraud was revealed in September 2015, Volkswagen's
shares tanked, causing large losses for investors and eventually
leading to the resignation of Mr. Winterkorn.
The company admitted that the emissions cheating that was
disclosed in the U.S. began in Germany. Over the course of a decade
VW engineers installed illegal software on nearly 11 million
vehicles to enable them to pass emissions tests even though they
emitted levels of toxic tailpipe emissions that violated
environmental laws.
Mr. Winterkorn became aware of the software cheat and the U.S.
investigation in the summer of 2015 at the latest, VW's supervisory
board said in a statement, adding that he had failed to act swiftly
and comprehensively to clarify the facts and hadn't ensured that
questions posed to the company by U.S. authorities were answered
quickly, completely and honestly.
As a result, the board's investigation concluded that Mr.
Winterkorn was in breach of his duties as chief executive.
Mr. Winterkorn has been indicted on charges of fraud in Germany.
He has repeatedly stated that he bears no responsibility for the
diesel scandal. Through his attorney, Mr. Winterkorn rejected the
board's allegation and said he regretted their decision to seek
damages against him.
Mr. Winterkorn joined Audi as a young engineer in 1981, becoming
CEO of Audi in 2002 and five years later CEO of the entire VW
group. He was known for micromanaging design and production
details. He was known to order changes to the angle of windshields
and would routinely measure the thickness of paint on new
models.
The board is also seeking damages from Mr. Stadler, who
succeeded Mr. Winterkorn as Audi chief executive in 2007 and
remained in the job until he was arrested in connection with the
diesel scandal in June 2018. He was released in October the same
year and charged with fraud in 2019. He has been on trial in Munich
with several other former Audi and Porsche executives since last
autumn.
VW's board said Friday that it had concluded that Mr. Stadler
had failed to investigate internally whether Audi engines used in
VW, Audi and Porsche vehicles contained illegal software.
VW's board said its internal study found no other top executives
in breach of their duties.
Mr. Stadler has said he is innocent of the charges he is being
tried for. Neither Mr. Stadler nor his attorney could be reached
for comment on the board's allegations or the company's decision to
seek damages from him.
The investigation into potential executive liability began in
the wake of the initial disclosures when VW commissioned the law
firm Gleiss Lutz to determine whether the company had the right and
responsibility to claim damages from any executives.
The final report was presented to the board this week, leading
to Friday's decision.
Write to William Boston at william.boston@wsj.com
(END) Dow Jones Newswires
March 26, 2021 12:05 ET (16:05 GMT)
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