A Stuttgart court ordered Porsche SE to pay €47 million ($54 million) to two investors because the family holding, which controls Volkswagen, failed to inform its shareholders about financial risks linked to VW’s diesel emissions fraud.
Although the investor compensation awarded is pocket change for a company which made a net profit of €3.3 billion last year, the ruling could set a precedent for other legal cases that the VW Group and its parent Porsche SE face. The verdict is the first of its kind among thousands of Dieselgate lawsuits in Europe, the US and elsewhere.
In a case in Braunschweig, a city close to VW’s headquarters in Wolfsburg, a single group of shareholders is demanding €9 billion from the carmaker as compensation for the lower value of their shares. VW’s preference shares fell as much as 40 percent after the carmaker, the world’s largest, admitted in September 2015 it had manipulated 11 million diesel cars worldwide.
Containing illegal engine software, the rigged vehicles appeared clean during lab tests but emitted illegal levels of nitrogen dioxide on the road. The highly toxic pollutants can cause asthma and contribute to the creation of smog. In a settlement with the US Justice Department, VW admitted to the fraud and the violation of emissions laws.
A legal milestone
The court singled out Martin Winterkorn, who was CEO of both VW Group as well as parent Porsche SE in 2014 and 2015. Because the VW executive received internal memos in May 2014 about the violation of US environmental laws, Porsche SE was just as aware of the risks. Porsche SE, which controls 52 percent of VW Group’s voting rights, should have set aside money for potential charges, Judge Fabian Reuschle said.
Lawyer Klaus Nieding, who represented a British investment fund, said the ruling set a milestone in the legal battles against the carmaker and its affiliates.
However, the verdict is not yet legally binding, because Porsche SE can appeal the ruling. The holding company, controlled by descendants of Beetle designer Ferdinand Porsche, already said it would appeal in case of a negative ruling and was willing to go to Germany’s Supreme Court. Porsche SE said that Winterkorn was subject to confidentiality agreements, which prevented him from informing the holding about what he learned in 2014 as VW’s boss.
Mr. Winterkorn resigned days after the scandal became known in September 2015 and has said he only became aware of the affair that month.
René Bender is a reporter on Handelsblatt’s investigative team. Gilbert Kreijger, an editor with Handelsblatt Global, contributed to this article. To contact the author: firstname.lastname@example.org