Former VW CEO denies criminal charges over diesel emissions scandal

Former Volkswagen AG Chief Executive Martin Winterkorn has denied defrauding customers and taking too long to alert markets to diesel emissions cheating, telling a German criminal court that he was never properly informed of the scale of the scam.

Winterkorn has said he is not guilty of fraud and denied allegations that as early as May 2014 he knew about diesel emissions manipulation in VW cars that made them appear greener than they really were.

“I’m not an engine developer, I’m not an emissions control specialist, and I’m not a software expert who has dealt with engines and emissions cleaning systems,” Winterkorn said on the second day of his trial. “At the time, I didn’t understand what the technical issues were, nor did I realize that VW had already been in the US market with illegal software for years.”

Nine years after the diesel emissions scandal, Winterkorn, 77, is on trial in Braunschweig over the affair that sparked global outrage and triggered his departure from the company in September 2015, just days after authorities revealed their investigation. VW, which is now considering closing factories in Germany for the first time in its 87-year history, has paid more than 30 billion euros ($33 billion) over the scandal.

Winterkorn is not accused of being involved in the invention of the so-called defeat device. Instead, he is accused of committing fraud by failing to stop it once he found out about it just over a decade ago – allowing 9 million cars with the software to be sold in Europe and USA, causing a total damage of EUR 100 million to customers.

A second allegation alleges that Winterkorn dragged his feet in informing markets about emissions manipulation. The third alleges that Winterkorn lied while giving evidence to a parliamentary inquiry in January 2017.

His job as CEO was to make long-term strategic decisions and not micromanage technical issues, the former chief justice told them. The VW brand had a huge engine development division and he depended on his managers to keep him informed comprehensively and honestly – but that didn’t happen on the diesel issue, he said.

Even in mid-2015, when US authorities were investigating, the exact details of the scam were not fully disclosed to him, and he was not involved in discussions with regulators. He also thought there was a software solution at hand that would have solved the problem. That’s why he, nor anyone else in the company, saw the need to inform the markets about it, he said.

VW sold between 60,000 and 80,000 vehicles a year in that segment in the US. The number was low compared to VW’s total U.S. sales and almost insignificant on a global scale, Winterkorn said. So the allegation that he was afraid of losing profits was unfounded, he added.

“Had I realized that illegal software was behind the high emissions and that there was considerable legal risk to VW, I would have stepped in immediately and stopped all further sales and deliveries of diesel vehicles in the US,” he said he.

Presiding Judge Johannes Mühe reported that the parties met after Tuesday’s hearing to discuss a potential settlement – to no avail. Prosecutors want Winterkorn to confess to wrongdoing, while his lawyers say their client cannot admit anything that would infer intent because it would carry huge liability risks for him and could even void an 11 million euro settlement who ended it with VW.

The parties have already met several times earlier this year to discuss a settlement. Prosecutors are under time pressure because market manipulation charges can expire within a year. Winterkorn’s lawyer told the justices the case would have to examine every car sold in the U.S. because it wasn’t clear they were always sold to consumers. Even if there had been, there might not have been any financial damage because, unlike in Europe, there was never any risk of US regulators ordering them off the roads.

Because the vast majority of cars reviewed in this case were sold in the US, that review could take years. Winterkorn’s health may deteriorate, and that could jeopardize the overall case, said his lawyer, Stefan Kirsch.

Photo: Photographer: Krisztian Bocsi/Bloomberg

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Fraud