Tax Case

Volkswagen Facing Wave of Lawsuits

VW Volkswagen scaled workers meeting at Wolfsburg headquarters Matthias Mueller CEO speaking Source Julian Stratenschulte dpa
Volkswagen CEO Matthias Müller addresses his employees.
  • Why it matters

    Why it matters

    The growing costs of Volkswagen’s Dieselgate scandal are roiling the company’s union workforce, which could soon take action to protest job cuts it perceives were caused by management mistakes.

  • Facts

    Facts

    • More than 20,000 VW workers gathered to hear the latest news on Dieselgate at a factory hall on Tuesday in Wolfsburg.
    • During the meeting, workers learned that prosecutors in nearby Braunschweig were investigating 17 instead of six VW employees in the scandal, which appears to be widening amid reports that many managers knew of emissions irregularities.
    • Works Council Chairman Bernd Osterloh praised VW CEO Matthias Müller but criticized the company’s brand chief, Herbert Diess, for communicating poorly with rank-and-file over the status of the crisis and its effect on VW production.
  • Audio

    Audio

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A new wave of legal threats may be rolling toward Volkswagen in its diesel-emissions scandal.

The U.S. Department of Justice may pursue Europe’s largest automaker for millions of dollars in tax rebates paid to VW owners who thought they were buying environmentally friendly vehicles, the Wall Street Journal reported, citing U.S. sources.

Meanwhile, a unit of German insurer Allianz said it too may join one of the hundreds of class action lawsuits being brought against Volkswagen. A spokesman for the fund management unit, AGI, said the German company may seek to recoup damages if it determines VW’s management failed to inform investors in a timely fashion of the scandal and its effect on earnings.

Investigators in Germany and the United States are trying to determine whether top VW managers ordered the software manipulation that falsified diesel emissions on up to 11 million cars, and separately, whether they informed shareholders in a timely fashion of the costs of the deception.

Internal VW documents given to Handelsblatt suggest that VW’s top managers, including then-Chief Executive Martin Winterkorn and the current supervisory board chairman, Hans Dieter Pötsch, had been apprised of the problem weeks before VW informed the public.

 

VW Dieselgate-who knew what when chronology Volkswagen executive CEO Martin Winterkorn Hans Dieter Poetsch 01

 

Volkswagen has repeatedly denied that top managers, including Mr. Pötsch, who was VW’s chief financial officer at the time, Mr. Winterkorn and his successor, former Porsche boss Matthias Müller, knew of or ordered the software manipulation that has led to the biggest crisis in the 78-year history of Volkswagen.

But as investigations in Germany and the United States progress, VW workers are becoming increasingly concerned that what the company has blamed on a few rogue mid-level engineers may turn out to be a much more organized, and costly deception.

At a meeting of 20,000 VW workers at its main factory in Wolfsburg on Tuesday, the automaker’s powerful union representatives were unnerved by reports that German prosecutors in nearby Braunschweig had expanded their list of suspects in the Dieselgate exception from an initial group of six to 17 VW employees.

Although that group still doesn’t include VW’s top managers, many rank-and-file employees are getting nervous the scandal may begin to threaten their own livelihood at one of Germany’s biggest private-sector employers.

The meeting in VW’s massive Hall 11, a cavernous brick building used as a meeting place since the end of World War II, was packed and many VW employees lined up outside to listen to speeches from managers, union representatives and shareholders.

 

VW Volkswagen Bernd Osterloh works council chair left and Matthias Mueller CEO talk during meeting at Wolfsburg VW headquarters March 8 2016 Source Julian Stratenschulte dpa
The VW works council chairman, Bernd Osterloh, left, thanked CEO Matthias Müller, right, for his efforts on behalf of Volkswagen since he took over as the scandal broke last September. The two appeared before 20,000 VW workers on Tuesday in a packed production hall in Wolfsburg. Source: DPA

 

The massive gathering was organized after a meeting of Volkswagen’s powerful group works council, the employee representatives that sit on Volkswagen’s policy-setting supervisory board meeting. VW’s powerful labor leader, Bernd Osterloh, posed for photographs with Mr. Müller, the chief executive, Mr. Pötsch, the supervisory board chairman, and Stephan Weil, the state premier of Lower Saxony, which owns a 20-percent stake in the automaker.

For the first time since the Dieselgate scandal broke last September, Volkswagen allowed journalists in to witness a portion of the workers’ meeting.

While much of the event was orchestrated to show solidarity between management and unions, the increasing tensions over the potential consequences of the scandal — and its effect on employement at Volkswagen — were played out in public.

Works Council President Mr. Osterloh, the ostensible host of the meeting, praised Mr. Müller for what he is doing for Volkswagen “at this difficult time.” But then he was openly critical of Herbert Diess, the chief executive of the Volkswagen passenger cars brand, saying his communication with employees needed improvement.

“You see a lot of important projects, but we are not happy with the implementation,” Mr. Osterloh said. He was reportedly even sharper in his criticism of Mr. Diess, a former BMW executive who joined Volkswagen last July just months before the scandal broke, in the private portion of the gathering.

 

VW's Dieselgate Affair volkswagen

 

The divisions within Volkswagen are becoming clear. On the one side is Mr.  Müller, who is trying appease nervous employees. At the gathering he announced a “recognition bonus” program for workers for exceptional performance in the previous year.

But his good news for VW workers was short on specifics. On the other side is Mr. Diess, who was poached from BMW to boost the slim profit margins in the VW-brand business, a mass market business that is being encroached on by Toyota and other lower-cost rivals.

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