Ex-Volkswagen Chief Investigated by Germany in Emissions Cheating Scandal

Ex-Volkswagen Chief Investigated by Germany in Emissions Cheating Scandal

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German prosecutors said for the first time on Friday that they had evidence that Volkswagen’s former chief executive took part in the company’s emissions fraud, significantly raising the stakes for the carmaker and undercutting its attempts to put the scandal behind it.

Martin Winterkorn, who resigned as chief executive in September 2015 after the emissions cheating came to light, is under investigation for fraud and false advertising, according to prosecutors in Braunschweig, Germany. The authorities also increased the number of people under investigation and portrayed a far more extensive conspiracy than before.

Mr. Winterkorn and Hans Dieter Pötsch, the Volkswagen supervisory board chairman, were already under investigation for violations of securities laws. But the new fraud allegations suggest that prosecutors suspect Mr. Winterkorn had a more active role than he or the company have acknowledged.

The new allegations also point to a larger number of conspirators, and they further undermine Volkswagen’s attempts to portray the fraud, in which its diesel vehicles emitted lower levels of pollutants in lab testing than in the real world, as the work of executives and engineers below the level of its board. The assertions leave the automaker even more vulnerable to lawsuits by shareholders in the United States and Europe, who are seeking billions of dollars in damages.

Prosecutors said in a statement that the number of people officially under investigation had risen to 37 from 21, after police searches of dozens of homes and offices in and around Wolfsburg, Germany, where Volkswagen has its headquarters.

The latest developments signal that Volkswagen is still far from able to move beyond a scandal that has contributed to a loss of market share in Europe and to slumping sales in the United States.

This month, Volkswagen pleaded guilty to violations of the Clean Air Act in a settlement with the United States government that also includes a $4.3 billion fine. In a detailed admission of wrongdoing, Volkswagen avoided implicating any members of the management board.

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How Volkswagen Has Grappled With Its Diesel Scandal

Volkswagen has admitted that 11 million of its vehicles were equipped with software that was used to cheat on emissions tests. The company is now contending with the fallout.



OPEN Graphic


But investigators in Braunschweig said in a statement on Friday that there was evidence that Mr. Winterkorn “could have known of the manipulated software and its effect sooner than he has maintained.”

Just last week, Mr. Winterkorn told a committee of the German Parliament that he had heard of the illegal software only days before the scandal came to light, and in a statement on Friday he stood by that testimony.

Although Mr. Winterkorn has resigned, the upper layer of management at Volkswagen remains dominated by longtime insiders, including Matthias Müller, the current chief executive. Volkswagen, known for its insular corporate culture, has been reluctant to appoint outsiders to top positions.

One of few people from outside the company to have joined the management board since the scandal broke is leaving amid signs of friction over her role. Christine Hohmann-Dennhardt, a former judge in Germany’s highest court, had been brought in to overhaul Volkswagen’s system for preventing wrongdoing.

Volkswagen said in a statement on Thursday that Ms. Hohmann-Dennhardt would be leaving, in part because she and the company differed in their “understanding of responsibilities and future operating structures within the function she leads.”

United States authorities have indicted six former and current Volkswagen employees on charges of conspiring to defraud the government by programming pollution controls in diesel motors to function properly only when software detected that a test was underway.

Five of the six suspects are in Germany, and one is in jail in Miami. The likelihood of more indictments may be constraining Volkswagen executives’ ability to travel outside Germany, where they are less likely to be extradited to the United States.

The company sent a much smaller contingent of executives to the North American International Auto Show in Detroit this month than usual, but said it was because of a reassessment of the resources it commits to car shows.

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