VOW3 Volkswagen AG

By William Boston 

Ex-Volkswagen CEO Ordered to Face Trial for Dieselgate role

BERLIN -- Five years after Volkswagen AG admitted to rigging millions of diesel-powered vehicles to cheat emissions tests, the former CEO Martin Winterkorn was ordered Wednesday to face trial on charges of defrauding customers in a case that could shed new light on one of Germany's largest corporate scandals.

The dieselgate scandal plunged the world's biggest car maker by sales into an existential crisis and unleashed a consumer and regulatory backlash against diesel vehicles that has helped spawn massive investment by German auto makers to develop electric vehicles.

It was on Mr. Winterkorn's watch as CEO that Volkswagen, realizing its new "clean diesel" vehicles couldn't meet tough U.S. emissions standards, proceeded to install illegal software to enable them to pass emissions tests even though they greatly exceeded allowable toxic emissions during normal road use, in Volkswagen's own admission.

After reviewing an April 2019 indictment of Mr. Winterkorn and four unnamed senior executives involved in developing the diesel engines, the District Court of Braunschweig said Wednesday there was a "substantial probability of conviction" of Mr. Winterkorn based on the evidence provided in the indictment and ordered him to face trial.

In a statement, Mr. Winterkorn's attorney made no comment about the fraud charge, but welcomed the court's decision not to pursue charges that the former CEO had damaged Volkswagen, which could have led to exorbitant fines.

Mr. Winterkorn became CEO of Volkswagen in 2007 and immediately launched a drive to catapult the German manufacturer ahead of General Motors Co. and Toyota Motors Corp. to become the biggest auto maker in the world. One element of that drive was to expand the company's sales in the U.S. through new "clean diesel" vehicles that promised robust driving performance and fuel economy that met strict U.S. emission standards.

Volkswagen carried out the deception for nearly a decade until a group of post-graduate students in 2014 measured emissions from several diesel vehicles for a research project and discovered that Volkswagen's diesel engine emitted much higher levels of nitrogen oxide particles during normal driving than during treadmill tests.

The discovery prompted the U.S. Environmental Protection Agency to begin investigating. In September 2015, the U.S. government made the accusation public and charged Volkswagen with violating U.S. law, including defrauding the U.S. government and U.S. consumers. Volkswagen pleaded guilty to the charges and has paid more than $30 billion in fines, penalties and compensation for consumers.

In its indictment, which the district court largely upheld, the state's attorney alleges that Mr. Winterkorn became aware of the full extent of the deception as early as May 25, 2014, but did nothing in his role as CEO to end the practice and bring it to the attention of the authorities.

Volkswagen, which has already settled all criminal investigations against the company in Germany and the U.S., welcomed the court's decision to bring Mr. Winterkorn and other executives to trial.

"It is of the utmost importance to our company, its employees, and shareholders that the actions that led to the diesel crisis are resolved legally," the company said.

Write to William Boston at william.boston@wsj.com

(END) Dow Jones Newswires

September 09, 2020 11:40 ET (15:40 GMT)

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