VW scandal: German prosecutors launch inquiry into former boss

Martin Winterkorn faces possible fraud charges over world’s biggest carmaker’s use of software to rig diesel emissions tests

The crisis enveloping Volkswagen has intensified as German prosecutors opened an investigation of the former boss of the world’s biggest carmaker, Martin Winterkorn, over the emissions scandal.

As a senior German politician expressed concerns about the effects on the wider economy, Winterkorn became the subject of a preliminary inquiry by prosecutors in Braunschweig into possible fraud relating to the sale of vehicles with manipulated emissions data.

Braunschweig is a town close to Wolfsburg, the home of VW. The carmaker has been rocked by the scandal, which erupted 10 days ago when a US government agency revealed that it had discovered VW had been using sophisticated software to cheat emissions tests.

Since then shares in VW, a lynchpin of the Germany economy, have been in freefall. They are now down 40% since the US Environmental Protection Agency accused the carmaker of installing a “defeat device”, which reduced nitrogen oxide (NOx) emissions under test conditions.

The latest slump in the shares – they lost 7.5% on Monday – came after VW provided more detail about the 11m cars caught up in dodging the emission tests. Some 2.1m are Audis – A1, A3, A4, A5, A6, TT, Q3 and Q5 models – and 1.2m are Skodas.

Car owners in the UK are still awaiting information about how many of the affected vehicles were sold here. Lawyers in the UK and other countries said there was likely to be an avalanche of claims when it becomes clear where the cars fitted with the defeat devices were sold.

The company refused to comment on reports that three senior executives – Heinz-Jakob Neusser, head of brand development at VW, Ulrich Hackenberg, head of research and development at Audi, and Wolfgang Hatz, R&D chief at Porsche – had been suspended. It also refused to confirm reports that one of the biggest US law firms, Jones Day, was being lined up to lead an internal investigation.

Reuters has reported that Hackenberg is taking legal action.

Winterkorn was named in a statement issued by the German prosecutors, who said he was being investigated over “allegations of fraud in the sale of cars with manipulated emissions data”. The prosecutors said they were trying to establish who was responsible for the installation of the defeat devices. In Germany prosecutors are obliged to investigate allegations and in this case it is understood charges have been filed by about 10 individuals.

Winterkorn, one of the highest paid bosses in Germany, could not be reached for further comment. But when he quit last Wednesday – just 48 hours before he had been expected to be confirmed in the top job for another five years – he insisted that he was not responsible for the scandal gripping the business he has run since 2007.

“Above all, I am stunned that misconduct on such a scale was possible in the Volkswagen Group. I am doing this [resigning] in the interests of the company even though I am not aware of any wrongdoing on my part,” he said last week.

His replacement, Matthias Müller, who was head of Porsche, which is owned by VW – is now scrambling to repair the company’s reputation. According to a letter seen by Reuters, he told staff: “VW is in a dramatic situation. It will be far from easy to restore the reputation of the company and win back trust from customers.”The company has set aside €6.5bn (£4.8bn) to cover the costs of the scandal, but analysts expect the final total to be much higher given that fines levied in the US alone could reach $18bn (£12bn).

Germany’s deputy finance minister, Jens Spahn, said the wider Germany economy could also be hit by the scandal. “The car industry is crucial for the German economy,” he told a conference. “ It [the scandal] can have a big impact on the German economy. This should worry us a little.”

Vehicle products make up 17% of German industrial output, according to economists at Capital Economics, while the automotive industry accounts for almost 5% of overall economic output. Economists calculate that if industries with ties to vehicle manufacturing are included, as many as 15% of German jobs may be reliant on the industry in some way. However, they have played down the long-term impact of the scandal on the economy.

The company is also facing protests from investors at its annual meeting next month. Hans-Christoph Hirt, a director at the advisers Hermes EOS, which represents about 40 investors, intends to raise questions about the make-up of the board and call for changes to corporate culture.

The supervisory board’s choice of corporate insiders as CEO and chair-elect also raises some real doubts whether the key shareholders have recognised the need for fundamental reform and a real new beginning,” said Hirt.

Hirt said he had been in contact with about six other major carmakers to seek clarity on whether they were being drawn into the emissions scandal.


Jill Treanor

The GuardianTramp

Related Content

Article image
German carmakers face EU anti-trust inquiry over emissions
BMW, Daimler, VW, Audi and Porsche suspected of colluding to limit clean technology

Daniel Boffey in Brussels

18, Sep, 2018 @1:22 PM

Article image
Volkswagen: German prosecutors launch investigation into former boss
Inquiry focuses on outgoing CEO Martin Winterkorn and allegations of fraud in sale of cars with manipulated emissions data

Staff and agencies

28, Sep, 2015 @11:15 AM

Article image
VW faces deluge of UK legal claims over emissions tests
Law firms say car owners, dealerships and shareholders may have strong case as Germany confirms defeat devices were fitted in European models

Gwyn Topham and Graeme Wearden

24, Sep, 2015 @11:51 AM

Article image
VW scandal: staff suspended as car giant appoints new CEO
Veteran head of Porsche division Matthias Müller takes over car giant and blames ‘small group’ of staff for emissions scandal

Graham Ruddick and Sean Farrell

25, Sep, 2015 @6:39 PM

Article image
German court rules against Volkswagen in 'dieselgate' scandal
Carmaker must pay compensation to motorist who bought minivan fitted with emissions-cheating software

Jasper Jolly

25, May, 2020 @4:48 PM

Article image
VW scandal must change how we think about transport and the environment | Letters
Letters: Electric vehicles definitely have a future, but we need to start designing towns and cities so that drivers are the exception, not the norm


24, Sep, 2015 @6:36 PM

Article image
Porsche shares rise on first trading day in €75bn stock market float
German carmaker Volkswagen lists 12.5% of Porsche shares to raise billions to invest in electric cars

Jasper Jolly

29, Sep, 2022 @11:28 AM

Article image
VW scandal: two simple questions, two complex answers
The US Congress hearing into the emissions-rigging scandal mixed frustration with incredulity at answers from Volkswagen’s US CEO Michael Horn

Graham Ruddick

08, Oct, 2015 @7:24 PM

Article image
Porsche bids farewell to Wendelin Wiedeking
Wendelin Wiedeking forced to step down as audacious bid to seize Volkswagen fails

David Teather

23, Jul, 2009 @6:01 PM

Article image
Volkswagen scandal – seven days that rocked the German carmaker
In just a week the VW emissions scandal has wiped a third of the carmaker’s value and become a bigger threat to the German economy than the Greek debt crisis

Gwyn Topham Transport correspondent

25, Sep, 2015 @6:32 PM