German prosecutors indict top Volkswagen bosses over emissions scandal
U.S. also charges Fiat Chrysler senior manager with conspiracy to mislead regulators
German prosecutors are pressing criminal charges against the chief executive officer, chairman, and a former CEO of Volkswagen, saying they intentionally delayed telling investors about the carmaker's cheating of U.S diesel emissions tests.
Prosecutors in the city of Braunschweig, about 230 kilometres west of Berlin, said on Tuesday they aimed to charge Volkswagen chief executive Herbert Diess, chairman Hans Dieter Poetsch and former CEO Martin Winterkorn with stock market manipulation.
Four years after the German company admitted using illegal software to cheat U.S. diesel engine tests, the charges show it is still struggling to move on from a scandal which has cost it more than $30 billion ($39 billion Cdn) in vehicle refits, fines and provisions.
Court proceedings are underway over that admission from September 2015. The indictment from the prosecutors in Braunschweig — in Volkswagen's home region of Lower Saxony — is part of a separate legal push to try managers over allegations they delayed disclosing the scandal to investors.
Lawyers for the three accused said they would contest the charges, while Volkswagen said its supervisory board would meet immediately to discuss the indictments which, if accepted by a Braunschweig state court, will lead to a trial date being set.
Diess's lawyer said the indictment would not hinder him in his role as CEO, adding that as Diess did not join Volkswagen until July 2015 he could not have foreseen the scandal would have such a huge impact on the company.
Volkswagen shares lost up to 37 per cent in value in the days after the scandal broke. Had investors known about the emissions test cheating, they might have sold shares earlier or not made purchases, plaintiffs have argued.
Volkswagen and its executives have said the fallout from the scandal was not foreseeable, and that they had expected to reach a settlement with U.S. authorities prior to the disclosure of the test cheating.
The Braunschweig prosecutors said the accused should have kept investors informed.
"They pursued a strategy to achieve a settlement with the U.S. authorities without disclosing all relevant information," they said in a statement.
Winterkorn resigned in the days after the scandal broke, having been chief executive for eight years He told German lawmakers in early 2017 that he did not find out about the cheating any earlier than VW had officially admitted.
Poetsch became a management board member at Volkswagen in 2004 and was made chairman in 2015.
Fiat Chrysler manager charged
Meanwhile, a senior manager at Fiat Chrysler Automobiles was charged in Detroit earlier this month in connection with the U.S. Justice Department's probe into excess emissions in diesel vehicles, according to documents unsealed Tuesday.
Emanuele Palma, a diesel drivability and emissions senior manager at Fiat Chrysler, was charged with conspiring to mislead regulators, customers and the public about the emissions system used on Fiat Chrysler's U.S. diesel vehicles, according to a grand jury indictment.
Palma was arrested Tuesday and is in custody, said Gina Balaya, a spokeswoman for the U.S. Attorney's Office in Detroit.
Lawyers for Palma could not immediately be identified from the legal documents.
Fiat Chrysler said in a statement it was "just learning about details of the matter. We will continue to co-operate fully with authorities."
Fiat Chrysler agreed to pay about $800 million ($1 billion Cdn) to resolve civil claims from the Justice Department, state officials and customers alleging the company installed illegal software allowing more than 100,000 diesel-powered vehicles to dupe government emissions tests and then pollute beyond legal limits on the road.
The developments in the criminal probe signal additional scrutiny of Fiat Chrysler's environmental practices remains on the horizon, despite the automaker's January settlement of civil claims stemming from the alleged emissions violations.
The indictment says Palma and unnamed co-conspirators "purposefully calibrated the emissions control system" to produce lower emissions under federal test cycles and higher emissions in real world emissions.