WirtschaftsWoche Exclusive

German Prosecutors Investigate VW Head Müller

Volkswagen AG Annual Shareholders’ Meeting As Post Emission Scandal Turnaround Takes Hold
VW's two top executives both appear to be under investigation. Source: Bloomberg

Volkswagen Chief Executive Matthias Müller has so far been in the clear when it comes having prior knowledge of the diesel emissions scandal that rocked the carmaker, but that may be about to change. Prosecutors in Stuttgart have launched an investigation into the VW boss for suspected market manipulation, according to the German business weekly WirtschaftsWoche, a Handelsblatt sister publication.

The scandal, dubbed Dieselgate, saw carmaker VW install cheating software in its diesel cars to rig emission tests. It broke into the public September 2015 but there have been ongoing questions over how much top executives at VW and its subsidiaries knew ahead of the scandal going public, and whether they should have informed shareholders.

The prosecutor’s office is investigating Mr. Müller, who was head of VW subsidiary Porsche at the time the scandal broke, as well as Volkswagen Supervisory Board Chairman Hans Dieter Pötsch and the group’s former CEO Martin Winterkorn under the same charges, WirtschaftsWoche has learned. The Stuttgart office only confirmed it had filed received requests to file charges against the three men as well as Porsche manager Philipp von Hagen, but declined to comment on whether it has launched official investigations.

The probes were triggered by a charge filed by Germany’s financial watchdog BaFin in the summer of 2016, when the regulator said it suspected the former Porsche management board of illegally benefiting from Dieselgate. The watchdog said Porsche shares may have been manipulated due to the withholding of information on the diesel scandal from shareholders. Porsche SE is the group through which the billionaire Porsche and Piech families control 52.2 percent of voting shares in VW.

 

Mr. Müller at the time had been Porsche’s head of strategy and corporate development. He took over in shortly after the scandal broke from Mr. Winterkorn, who resigned. A Volkswagen spokesmen for Mr. Müller and Mr. Pötsch declined to comment on the report. The spokesman for Mr. Winterkorn could not be reached.

The investigations are just the latest sign of the company being stuck in the fallouts of a scandal it works hard to leave behind. Shareholders at the carmaker’s annual general meeting on Wednesday also weren’t prepared to let go of the issue.

While VW surprised investors with better-than-expected first-quarter profits and surpassed Toyota as largest automaker in 2016, investors are unhappy with the company’s handling of the biggest corporate scandal in its history.

Volkswagen to date has agreed to pay up to $25 billion in the United States and offered to buy back some 500,000 polluting vehicles. And it still faces billions of euros in claims from customers and investor groups.

To analyze the failures that led to the scandal, Volkswagen commissioned US law firms Jones Day to conduct an internal investigation – the findings of which were to be made available to shareholders, VW originally said. But the group has since changed course, citing legal complications. The Jones Day review has been the basis for a “statement of facts” by the US Justice Department in a $4.3 billion settlement.

“There is no written concluding report by Jones Day and there will not be one,” chairman Pötsch told some 3,000 shareholders at Wednesday’s meeting. “I ask for your understanding that VW for legal reasons is prevented from publishing such a final report.”

But disgruntled shareholders had little understanding, instead accusing the company to do little to alleviate investor concerns.

“Your reference to the statement of facts agreed in the U.S. is completely insufficient and almost insulting to all those who are interested in complete clarification of responsibilities,” said Christian Strenger, supervisory board member at DWS Deutsche Asset Management GmbH.

Shareholders also criticized that not enough was done to address outstanding claims and overhaul corporate governance.

Annina Reimann is a Frankfurt-based correspondent with WirtschaftsWoche, a sister publication of Handelsblatt Global. Contribution by Reuters. To contact the author: redaktion@wiwo.de

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