Handelsblatt Exclusive

Sources: VW Wants Money from Former CEO

FILE PHOTO: Martin Winterkorn, chief executive officer of Volkswagen AG, reacts during an earnings news conference at the company's headquarters in Wolfsburg, Germany, on Monday, March 12, 2012. Volkswagen said 11 million vehicles were equipped with diesel engines at the center of a widening scandal over faked pollution controls that will cost the company at least 6.5 billion euros ($7.3 billion). Photographer: Michele Tantussi/Bloomberg *** Local Caption *** Martin Winterkorn
Martin Winterkorn when he was still CEO of Volkswagen.
  • Why it matters

    Why it matters

    • VW may file claims through an insurance policy intended to cover losses caused by management errors. If it does, it will be tantamount to admitting that top management knew about VW’s emissions-rigging scandal.
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  • Facts

    Facts

    • Volkswagen holds a €500 million directors and officers insurance policy from an insurer group that includes Zurich and Allianz.
    • The diesel emissions scandal has already cost the company more than €16 billion.
    • The VW supervisory board has stated that it was unaware of any serious breaches of duty by current or former members of the board of management.
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Volkswagen is negotiating with its former chief executive Martin Winterkorn to pay money to the carmaker over its diesel emissions scandal, people familiar with the matter told Handelsblatt.

Volkswagen, which admitted last September it had rigged the engines of around 11 million diesel cars worldwide, declined to comment.

On being approached for comment, Mr. Winterkorn’s lawyer, Kersten von Schenck, said: “As a rule, we do not provide any information.”

Mr. Winterkorn resigned days after the scandal became public last year but he is still on VW’s pay list until his contract officially expires at the end of this year.

The affair has wiped off billions of euros from the carmaker’s market value, led to charges of €16.2 billion, or $18.3 billion, and hundreds of lawsuits in the United States and Europe, where investors and clients are demanding compensation.

Volkswagen, based in Wolfsburg, will face investor criticism on Wednesday, when it holds its annual general shareholders meeting. As part of a new strategy, the company will cut more than 40 of its roughly 340 models on the market, sources told Handelsblatt earlier this week.

Some of VW’s non-executive supervisory board members believe Mr. Winterkorn might partially bear a legal responsibility for the diesel emissions scandal, people familiar with the matter told Handelsblatt earlier this week.

Europe’s largest carmaker might invoke a policy that insures Volkswagen against financial losses resulting from management errors of judgment, people familiar with the matter told Handelsblatt last month.

 

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The automaker’s Directors & Officers insurance policy, which covers a total of €500 million in VW’s case, is standard at many larger corporations, which seek to limit damage from major unforeseen crises.

VW’s policy covers any legal fees generated by executives or former managers to defend themselves, lawyer Oliver Sieg of law firm Noerr told Handelsblatt. However, even insured executives have to bear part of the costs if there are damages, according to German law, Mr. Sieg said.

According to the law, Mr. Winterkorn would have to pay at least one and half times his fixed annual salary, in case he is proven to be liable for the diesel emissions scandal. The former executive earned a base salary of €1.62 million per year, but including bonuses his total pay has varied between €9.3 million and €17.5 million from 2010 to 2014.

The official line at VW is still the position as given by its supervisory board’s main committee, which stated last year that Mr. Winterkorn had no knowledge of the rigging of diesel emissions. An ongoing internal investigation by U.S. law firm Jones Day has reportedly not found any evidence that Mr. Winterkorn played any role in the manipulation scheme.

Mr. Winterkorn maintains that he is innocent. VW said in March Mr. Winterkorn was informed about emissions irregularities as early as May 2014, but he may have failed to heed the warnings.

VW may have to add another lawsuit to its current list of suits. A German lawyer announced a new lawsuit agains VW, according to German newspaper Der Tagesspiegel, an affiliated publication of the Handelsblatt Publishing Group. Lawyer Jan-Eike Andresen said his firm my-right.de represents 100,000 VW customers and wants to obtain financial compensation for the affected diesel-car owners.

 

Martin Murphy covers the auto industry and Volkswagen at Handelsblatt in Düsseldorf.  Volker Votsmeier is an editor with Handelsblatt’s investigative reporting team. To reach the authors: murphy@handelsblatt.com and votsmeier@handelsblatt.com

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