Dieselgate reloaded

Prosecutors raid VW, seek evidence of market manipulation

Polizei
Some of VW's cars came to headquarters for an inspection. Source: DPA

Germany’s biggest carmaker, long associated with a scandal over manipulating diesel emissions, sank a bit deeper into the Dieselgate swamp this week. This time it’s inhaling a different potentially dangerous gas: CO2.

Authorities think VW may have misled investors in 2015, a few months after the Dieselgate scandal broke, when the Wolfsburg-based company said a potentially separate problem involving carbon dioxide emissions and the fuel consumption of 800,000 vehicles was no longer a real risk to its bottom line. The new investigation could trigger a fresh round of shareholder lawsuits.

Prosecutors raided Volkswagen’s headquarters earlier this month and searched 13 offices as they sought to gather evidence, VW and the prosecutor’s office in Braunschweig said Tuesday. A company spokesman said the carmaker had correctly informed the public of what it knew in 2015. “Nothing will come of this matter, but we will have to deal with it,” VW’s legal expert Manfred Döss told reporters.

Two and a half years ago, VW was in crisis mode after US environmental watchdogs exposed that VW had manipulated 11 million diesel cars around the world. Models from VW and its subsidiaries Audi, Porsche and Skoda spewed higher levels of the toxic gas nitrogen oxide on the road than on paper. VW had rigged the diesel engines with illegal software to cheat emissions tests.

VW said in 2015 some 800,000 vehicles might emit higher levels of CO2 and use more fuel than listed.

In the slipstream of internal investigations into the scandal, VW employees found documents that hinted some 800,000 vehicles – diesel and gasoline – might be emitting higher levels of CO2 and use more fuel than listed. VW issued a statement on November 3, 2015, predicting the problem may cost the company €2 billion. A month later, on December 9, VW withdrew that forecast, issuing another statement saying the potential problem might only affect 36,000 vehicles. “The suspicion that the fuel consumption figures of current production vehicles had been unlawfully changed was not confirmed,” the carmaker said at the time.

Braunschweig prosecutors, however, believe VW’s second statement may have been “objectively wrong in terms of content.” The office is now investigating unknown individuals on the suspicion of market manipulation, a spokesman said. If VW’s statement was incorrect, it would have violated German disclosure laws that require a listed company to immediately inform investors about potentially market-moving developments.

If VW is deemed to have wrongfully notified its shareholders, it will have to pay a fine and might face civil lawsuits from investors. That would pile on top of the hundreds of lawsuits the carmaker is already dealing with from shareholders and drivers who claim that Dieselgate lowered the value of their stocks or cars.

It’s not entirely clear whether prosecutors believe VW actually understated CO2 and fuel consumption levels in their cars – or whether they simply believe the carmaker misled investors about what they knew and when.

A statement from the prosecutor’s office only said: “Based on the findings of the investigations in the CO2 case conducted here, as well as the other procedures relating to the emissions problem, there are now sufficient real indications that this statement was inaccurate.”

Volker Votsmeier is an investigative reporter with Handelsblatt. Stefan Menzel writes about the auto industry focusing on Volkswagen. Annina Reimann, a reporter at WirtschaftsWoche, a sister publication of Handelsblatt, contributed to this article. To contact the authors: votsmeier@handelsblatt.com and menzel@handelsblatt.com

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