Former Volkswagen CEO charged with fraud in Germany

Former Volkswagen boss Martin Winterkorn stepped down as chief executive in 2015, and has denied any wrongdoing. PHOTO: AGENCE FRANCE-PRESSE
Former Volkswagen boss Martin Winterkorn stepped down as chief executive in 2015, and has denied any wrongdoing. PHOTO: AGENCE FRANCE-PRESSE

BERLIN • German prosecutors have filed aggravated fraud charges against the former chief executive of Volkswagen Martin Winterkorn, who led the company when it deceived regulators about its vehicles' diesel exhaust levels.

The charges on Monday were the first criminal indictment in Germany against an individual in connection with the diesel scandal, which has cost Volkwagen tens of billions of dollars since it came to light in 2015.

In charging Winterkorn and four Volkswagen managers, whose names were not released, the public prosecutor's office in Braunschweig tied the five to events reaching as far back as 2006, when the deception was initially conceived.

The timeline is significant as it rejects initial claims by Volkswagen that senior management became aware of the defeat devices used to cheat emissions tests only after being confronted by United States environmental authorities in 2015.

The criminal charges are an important development in how German courts are dealing with the fallout of a scandal that has shaken Germans' trust in their car industry.

Even after paying US$33 billion (S$45 billion) in fines and settlements related to the scandal, the carmaker continues to face legal challenges and investigations by the authorities in the US and Germany.

The indictment on Monday includes charges of breach of trust, tax evasion and false certification, either directly or by aiding in such crimes. If convicted, Winterkorn could be sentenced to up to 10 years in prison. The prosecutor's office also said it would seek repayment of bonuses, the highest of which was nearly US$12.5 million.

Winterkorn, prosecutors said, continued to conceal the emissions fraud even after he was told that outsiders were questioning the company's emissions data.

The prosecutor's office also charged Winterkorn with approving a useless software update in 2014 at a cost of €23 million (S$35 million), despite knowing that it would not eliminate the defeat devices.

More than nine million cars with faked emissions tests were licensed in Europe and the US, the indictment said.

Winterkorn stepped down as Volkswagen's CEO in 2015, and has previously denied any wrongdoing.

His lawyer, Mr Felix Dorr, said on Monday that the prosecutor's office had not given his team sufficient access to the files for it to comment on the charges. No arrest warrant was issued.

Winterkorn is under indictment in the US, and he is unlikely to leave Germany for fear of being extradited. Germany does not extradite its own citizens.

Volkswagen declined to comment on the charges, saying in a statement that these were investigations against individuals.

In March, the US Securities and Exchange Commission sued Volkswagen, accusing the company of defrauding US investors.

The commission said Winterkorn had been aware of what it called a "massive" emissions fraud as early as November 2007. Similarly, a civil trial looking at the company's responsibility towards investors has been taking place in court in Braunschweig since October.

Last May, the US Department of Justice indicted Winterkorn and several other Volkswagen executives on charges that they conspired in the rigging of diesel vehicles to feign compliance with federal pollution standards.

The German prosecutor's office also said it was still investigating 36 other individuals who could face charges, though no timeline was given. Other than Winterkorn, who is considered a public person, none of the other four people charged,or the 36 investigated, were named because of German privacy laws.

The 692 pages outlining the charges still need to be approved by a Lower Saxony state court, in what is largely seen as a formality.

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A version of this article appeared in the print edition of The Straits Times on April 17, 2019, with the headline 'Former VW CEO charged with fraud in Germany'. Print Edition | Subscribe