Dieselgate scandal

VW Clan Emerges from the Shadows

Ferdinand Piech source AP
Will the family figures finally step forward?
  • Why it matters

    Why it matters

    • After many months of silence, the Porsche-Piëch family may be looking to get more publicly involved in the running of Volkswagen.
    •  
  • Facts

    Facts

    • The “Isny Round” is an annual, invitation-only summit of 100 top German business leaders and politicians, held in the idyllic Alpine resort of Isny.
    • The Porsche-Piëch family owns 50.76 per cent of the Volkswagen Group, via its holding company Porsche SE.
    • Diesel engines in luxury Audi and Porsche models may now also be implicated in the emissions data fraud.
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    Audio

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Since the Volkswagen emissions scandal first broke in September, the Porsche-Piëch family clan, which owns a majority of the VW Group, has remained quiet.

Since it emerged that VW had installed emissions-cheating software in 11 million vehicles, the company has suffered extensive damage including lawsuits, the dramatic fall of its share price and the most expensive recall in history.

Though the Dieselgate scandal continues to expand, little has been heard from Ferdinand Piëch, the long-standing patriarch forced in March to resign as chairman of VW’s supervisory board in the wake of a power struggle with the carmaker’s former CEO.

Now, though, the family may be readying itself to take a more public stand.

Since Mr. Piëch was forced out after losing a bitter power struggle on the Volkswagen board against then chief executive Martin Winterkorn, he has only occasionally made public appearances in his role as director of Porsche SE, the holding company by which the family controls the Volkswagen Group.

So far, little is known of Mr. Piëch’s opinions on the diesel engine scandal, except that he approved of Matthias Müller, the former Porsche head who replaced Mr. Winterkorn as Volkswagen’s chief executive soon after the Dieselgate scandal broke.

So Mr. Piëch’s appearance alongside key VW executives at last weekend’s “Isny Round” drew some attention. The Isny Round is an annual invitation-only gathering of top German executives and politicians, meeting at the Alpine resort of Isny. Sometimes called a “mini Davos,” the event sees much schmoozing, as well as discussions and speeches on politics and the economy.

This year’s theme was “Germany and Europe – What Does the Future Hold?”

Alongside the chairmen of pharmaceutical giants such as Roche and Merck, the speakers at the event also included Volkswagen’s chief executive Mr. Müller, and Rupert Stadler, chief executive of Audi, another key Volkswagen subsidiary and one of VW’s premium brands.

Mr. Müller and Mr. Stadler have received growing criticism in recent weeks, as Volkswagen has sunk further into the disaster of its own making.

The Dieselgate scandal is spreading and the company is struggling to cope with product recalls, criminal investigations and civil lawsuits worldwide.

This is increasing the pressure on VW top figures: ten weeks into the scandal, it is unclear whether management really has things under control.

VW’s communications have been widely criticized as inadequate and reactive and new problems continue to appear. Revelations now show the scandal is affecting diesel engines developed by Audi, too.

Audi is also VW’s most profitable subsidiary, and it is clearly bad news for the company if it too is sucked into the scandal’s vortex.

Volkswagen’s first response was all too typical: deny everything, then backtrack furiously.

It may have been the Audi link that prompted Mr. Piëch to come out of the shadows. He was in charge at Audi for years before becoming head of the Volkswagen Group. According to reports from the Isny summit, Mr. Piëch summoned Mr. Müller and Mr. Stadler for talks.

The two current VW executives face further showdowns with the Porsche-Piëch clan in the coming days. On Wednesday, Wolfgang Porsche is due at Volkswagen headquarters for a key meeting with employees. Mr. Porsche is expected to tell staff that the family stands firmly behind the company, say sources in the company. He will be accompanied by relatives Hans Michel Piëch and Ferdinand Oliver Porsche.

Wolfgang Porsche and Hans Michel Piëch are both in their seventies, grandsons of the dynasty’s founder.

Ferdinand Oliver Porsche is a key figure in the family’s fourth generation, foremost among the three dozen great-grandchildren set to inherit the Porsche billions.

Some say ostentatious declarations of support may be a dubious sign. One way or another, it will be a rare family appearance: since Mr. Piëch’s resignation, the clan has largely stayed behind the scenes.

Since the scandal broke, public statements have come from directors representing labor and politics: powerful workers’ representative Bernd Osterloh and Stephan Weil, the left-wing Lower Saxony state premier, who has a seat on VW board.

Mr. Stadler will have his own encounter with the family at Thursday’s meeting of Audi’s supervisory board. The same three family figures will attend: Wolfgang Porsche, Hans Michel Piëch and Ferdinand Oliver Porsche. Mr. Stadler is unlikely to enjoy the encounter: the directors will want to know why Audi engines were also equipped with “defeat devices”: software giving false readings during air quality tests.

Sources close to the Audi board say Mr. Stadler faces a grilling. And if things are a problem for Audi, they are a problem for Porsche: the rigged Audi engine is also used in the Porsche Cayenne, that brand’s luxury SUV. This fact, in turn, may implicate Mr. Müller, who was the boss of Porsche, before taking over as VW Group CEO in September.

Meanwhile against this troubled backdrop, another trial rumbles on and threatens further publicity. In Germany, investigators are looking into the circumstances of Porsche’s failed takeover of VW in 2008 in a complex trial that has seen the most senior figure in the auto industry in court. Wendel Wiedeking, who was president and chief executive of Porsche from 1993 to 2009, and his former finance chief, are accused of manipulating VW shares in a secret 2008 takeover bid.

Wolfgang Porsche is so far the only representative of the company’s supervisory board to be invited as a witness in the trial; all other members of the supervisory board will not be asked to take the stand, according to the Stuttgart regional court, where the trial is taking place.

In Isny, meanwhile, according to observers, Mr. Piëch’s conversations with Mr. Müller and Mr. Stadler appeared relatively calm.

However, the American authorities, including the FBI, may not take such a relaxed view.

 

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Handelsblatt’s Martin Murphy covers the auto, steel and defense industries, Christian Schnell covers the auto industry and Markus Fasse writes about cars and aviation. To contact the authors: murphy@handelsblatt.com, schnell@handelsblatt.com, fasse@handelsblatt.com

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