VW to Receive Dieselgate Settlement From Former CEO, Executives -- 2nd Update
June 09 2021 - 12:30PM
Dow Jones News
By William Boston
BERLIN -- Former Volkswagen AG Chief Executive Martin Winterkorn
and other executives will pay the company a total of $351 million
to settle lawsuits for their alleged roles in a decadelong
emissions fraud that continues to cast a shadow over the car maker
six years after it was disclosed by U.S. authorities, the company
said Wednesday.
Mr. Winterkorn, who became CEO in 2007 and still faces criminal
charges on allegations of fraud in the U.S. and Germany, was forced
to step down in September 2015, days after the U.S. charged the
company with fraud and violating U.S. environmental law as a result
of rigging nearly 11 million vehicles to cheat emissions tests and
then covering it up.
VW, now with its second CEO since Mr. Winterkorn's departure,
has sought to put the scandal behind it, launching one of the
industry's most expensive pivots to electric vehicles, but the
legal and financial implications continue to reverberate.
Separately on Wednesday, Berlin prosecutors filed charges
against Mr. Winterkorn alleging that he made false statements in
sworn testimony to an investigative committee of the German
parliament in January 2017. The prosecutor alleges that Mr.
Winterkorn intentionally misled the lawmakers about when he first
became aware of the illegal software on VW diesel engines.
French prosecutors said Wednesday that on May 6 they had issued
preliminary charges against VW for fraud in connection with the
diesel scandal. Prosecutors ordered VW to post EUR10 million,
equivalent to about $12.2 million, in bail and provide proof of a
bank guarantee of EUR60 million to cover potential
compensation.
News of the charges only came to light after the French issued
identical charges against French car maker Renault SA on Tuesday.
Renault denied any wrongdoing.
A VW spokesman said the company had already settled charges for
fraud in the diesel affair in Germany and paid fines of around EUR2
billion. The company said European Union law protected it from
being charged for the same offense again in another EU member
state. The company also said French consumers hadn't suffered any
compensable loss.
VW filed a lawsuit against Mr. Winterkorn, former Audi chief
Rupert Stadler and other executives in March, alleging gross
negligence in their duties as officers of the company. Mr.
Winterkorn and Mr. Stadler have repeatedly dismissed the
allegations and any intentional involvement in the scandal or its
coverup.
After months of negotiations, Mr. Winterkorn has agreed to pay
VW EUR11.2 million, equivalent to $13.6 million. Mr. Stadler has
agreed to pay EUR4.1 million. Former Audi board member Stefan
Knirsch agreed to pay EUR1 million to settle the case against him,
and Wolfgang Hatz, a former Porsche board member and key developer
of racing engines, agreed to a EUR1.5 million settlement.
Mr. Winterkorn couldn't immediately be reached for comment
through his lawyer. Mr. Stadler declined to comment. Mr. Knirsch
and Mr. Hatz couldn't immediately be reached for comment.
The lion's share of the deal is a EUR270 million payout from a
group of directors and officers insurance companies, a policy that
insures senior executives against claims of mismanagement or
misconduct.
The deal still needs to be approved by shareholders at VW's
annual meeting next month.
The settlement is one of the largest by any business executive
in Germany. Yet it is a far cry from the more than $35 billion in
fines, penalties, compensation and legal fees that VW has accrued
since U.S. authorities disclosed the scandal.
VW's supervisory board, which includes representatives of the
Porsche and Piech founding families, the state of Lower Saxony,
Qatar and top officials from Germany's powerful IG Metall trade
union, had sought the record amount as a precedent and warning to
existing and future managers.
For the past decade, the benchmark for compensation from former
executives believed to have failed in their oversight duties was
Heinrich von Pierer, the long-serving former CEO of industrial
electronics conglomerate Siemens AG.
Mr. von Pierer agreed in 2010 to pay EUR5 million to settle a
lawsuit brought against him by Siemens in the wake of a bribery
scandal that rocked the company.
A group of executives under his supervision also paid between
EUR500,000 and EUR4 million to settle lawsuits against them.
Mr. Winterkorn still faces criminal charges in the U.S. and
Germany. Mr. Stadler is on trial in Munich, facing charges of fraud
for continuing to sell Audi vehicles with tainted engines after
becoming aware at the end of September 2015 that the vehicles
contained illegal software.
Nick Kostov contributed to this article.
Write to William Boston at william.boston@wsj.com
(END) Dow Jones Newswires
June 09, 2021 12:17 ET (16:17 GMT)
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