Ex-VW boss Martin Winterkorn charged in Dieselgate scandal

German prosecutors have charged former Volkswagen boss Martin Winterkorn in the diesel emissions scandal. The charges include one of major fraud. The news coincides with VW showcasing its wares at the Shanghai auto show.

Public prosecutors in the German city of Braunschweig have brought charges against former Volkswagen CEO Martin Winterkorn over his role in the Dieselgate scandal, they said on Monday. Four other managers were also charged, they said.

Winterkorn stepped down as Volkswagen CEO in 2015 after revelations that the carmaker had programmed computers in its vehicles to detect when they were being tested and had altered the running of diesel engines to conceal the true level of emissions.

What are the charges, are others at risk?

  • The five are accused of multiple crimes realized in a single criminal action, especially a particularly serious case of fraud and an infraction of the law against unfair competition.
  • Winterkorn was given special mention for allegedly acting as a "guarantor" to authorities that VW was not selling manipulated vehicles even after he knew about the illegal manipulations.
  • Current CEO Herbert Diess said in Shanghai that he didn't expect to face charges.
  • VW shares, seemingly unaffected by the news, rose slightly in trading on Monday.
Dieselgate: A timeline

The disaster unfolds

About two weeks after Volkswagen admitted behind closed doors to US environmental regulators that it had installed cheating software in some 11 million of its diesel vehicles worldwide, the Environmental Protection Agency shared that information with the public. It was September 18, 2015. The ensuing crisis would eventually take a few unexpected turns.

Dieselgate: A timeline

The boss must go, long live the boss

Volkswagen's then-CEO Martin Winterkorn (above) had little choice but to step down several days after news of the scandal broke. In September, he tendered his resignation, but retained his other posts within the Volkswagen Group. Winterkorn's successor was Matthias Müller. Until taking the reins at VW, Müller had been the chairman at Porsche, a VW subsidiary.

Dieselgate: A timeline

Raiding headquarters

Regulators in the US weren't the only ones investigating VW. Authorities in Lower Saxony, the German state in which VW is based, were also scrutinizing the company. On October 8, state prosecutors raided VW's headquarters along with several other corporate locations.

Dieselgate: A timeline

Hell breaks loose

On January 4, 2016, the US government filed a lawsuit against VW in Detroit, accusing the German automaker of fraud and violations of American climate protection regulations. The lawsuit sought up to $46 billion for violations of the Clean Air Act.

Dieselgate: A timeline

Quit or forced out?

In March, the head of VW in the US, Michael Horn, resigned. In the initial days and weeks after the scandal broke, he was the one US authorities turned to for information. He issued an official apology on behalf of the automaker, asking for the public's forgiveness.

Dieselgate: A timeline

Settlement

On October 25, a US judge approved a final settlement that would have VW pay $15.3 billion. In addition, affected cars would be retrofitted with better, non-deceptive hardware and software, or else VW would buy them back completely from customers.

Dieselgate: A timeline

Imitators

When dieselgate first emerged in 2015, analysts said it was likely other car makers were also cheating tests. But it wasn't until 2017 that other companies were targeted in probes. In July, German authorities launched investigations into luxury car makers Porsche and Daimler for allegedly cheating emissions tests. Others, such as Audi and Chrysler, have also been hit by similar allegations.

Dieselgate: A timeline

Public still supportive

Despite dieselgate, VW has managed to keep the emissions scandal from utterly tarnishing its image. According to several polls, between 55 to 67 percent of Germans continue to trust the automaker. In the US, polls show that roughly 50 percent still believe the German company produces worthwhile vehicles.

Dieselgate: A timeline

Fuming over monkeys

In late January, however, VW suffered another heavy blow over reports that the company experimented on monkeys and made the animals inhale diesel fumes. To make matters worse, a separate experiment that had humans inhale relatively harmless nitrogen dioxide was revealed at the same time. Some media wrongly interpreted this to mean humans were also inhaling toxic fumes.

What could be the penalty? The prosecutors' statement said that the defendants could face from six months to 10 years' imprisonment if found guilty. It also said that they might have to forfeit any bonuses they had earned from sales based on the manipulation.

Read more: European Commission finds German automakers illegally colluded on emissions technology 

What charges are especially leveled at Winterkorn? Prosecutors said the former CEO knew about the emissions cheating as early as May 25, 2014, more than a year before VW publicly admitting to using the software in its vehicles to make them seem less polluting under lab conditions than on the road. They said Winterkorn also oversaw the issue of a software update in November 2014 whose only purpose was to cover up the cheating devices. Winterkorn has also had criminal charges filed against him in the US, but Germany does not typically extradite its citizens for prosecution in US courts. He has previously denied any personal involvement in the scandal.

Read more: Daimler: New emissions cheating software discovered — report

Current VW CEO not expecting charges

The charges coincide with the 2019 Auto Shanghai, one of the biggest car shows in the world. Speaking on the sidelines of the show, current VW CEO Herbert Diess said he was not expecting to face charges.

"I am not among the accused," Diess said. "I do not expect to be charged."

The VW CEO did not comment on Winterkorn's charges, instead focusing on the future of VW, in particular its ID ROOMZ, a planned new SUV which it presented in Shanghai on Sunday.

Diess said the ID ROOMZ will be the flagship electric car to be launched by VW in China.

"We plan to produce more than 22 million electric cars in the next 10 years," Diess said, adding that around half of VW's engineers were working on products destined for China. Diess said the ID ROOMZ would eventually be rolled out to other markets.

Heavy costs

Volkswagen has already incurred costs of €29 billion ($32.8 billion) related to the diesel emission scandal, much of that in the United States by way of fines, compensation and buyback schemes. In Germany, it has paid €1.8 billion in two fines. The company is also facing cases brought by hundreds of thousands of customers in Germany wanting compensation for having bought vehicles that turned out to have been manipulated.

Related Subjects

The charges against Winterkorn appeared to have little effect on the markets, with VW shares going up 1.25 percent to trade at €158.15 around 5:00 p.m. (1500 GMT) on Monday in Frankfurt.

Read more: VW emissions scandal: What did Winterkorn know?

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Business | 12.03.2019

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tj, law/msh (Reuters, dpa, AP)

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