The German VW investigations have reached another development as VW’s chairman of the supervisory board, Hans Dieter Potsch, has allegedly violated securities laws, which is being investigated in the criminal probe launched earlier this year in June.
The ongoing headache for the German car giants isn’t set to end anytime soon. With 11 million vehicles affected worldwide, this is one of the biggest scandals in history, and the importance of both civil claims and criminal investigations has never been more prominent.
The German manufacturers admitted to installing software that affected vehicle emissions – allegedly known as “defeat devices” – in around 11 million vehicles across the globe. The software allowed the vehicle to pass emissions testing when, in reality, they polluted up to 40 times more than the permitted limit of nitrogen oxide out in the real world.
The criminal investigations in Germany are looking into whether VW should have notified the investors of the cheating software earlier.
Accusations
Mr Potsch is accused with the failure to inform investors of the financial risks associated with the emissions scandal. This has also come at a time when more vehicles are being investigated, with fresh allegations emerging that VW may be responsible for manipulating CO2 emissions as well…
Criminal probe
The criminal investigation is likely to rip open new wounds for VW as it’s likely to reveal just how much people knew about what was going on in VW prior to the scandal erupting in the public eye. As part of the criminal investigations, Mr Potsch will have to disclose information that may shed some light into what the ‘top players’ were discussing at the time the manufacturers were using the so-called “defeat devices”.
Legal action across the globe
Just over a year on, there are no signs of the scandal slowing down.
Group action lawsuits in Germany claim that VW’s managers were aware of the scandal, and that they were required to notify investors by law. The lawsuits could cost the car manufacturers additional fines that could amount to millions of pounds.
Keeping quiet
It seems inconceivable to think that Mr Potsch was unaware of the manipulation of the emissions software. He was the chief financial officer since 2003 and was promoted to chairman in October 2015 – only a few weeks after news of the scandal came to light. As the chairman, he oversees the work of the management. There may be some sort of company culture at VW to keep silent as he continues to defend their actions by stating that the management board “duly fulfilled its disclosure obligation under German capital markets law“.
We can but speculate though…
Honesty and the VW Group are not too closely associated right now. This is shown when VW engineers reportedly concocted fake data to explain a huge discrepancy between the laboratory results and how much the vehicles polluted on the road. This was investigated when the California Air Resources Board (CARB) did their internal investigations which led to the scandal erupting. The deputy executive of CARB, Alberto Ayala, said that VW had “lied through their teeth” as they managed to cover it up for more than a year.
By attempting the reported cover-up of the whole scandal, the company is under even further scrutiny. They were not able to take advantage of lower penalties as they were not open with the information, and it continues to be the case as the VW management team are keeping a tight lid on what they knew.
Lower financial penalties are enjoyed by companies who are open about their wrongdoing and cooperate with authorities by taking disciplinary action against responsible people within the company. Just how open have VW been so far?
Is it time for VW’s management to take responsibility?
VW’s management board continue to deny their knowledge and blame engineers for their wrongdoing. But it is just a matter of time before Court documents and evidence quash such claims that the management team are possibly spinning?
If they are found guilty then it is not just financial penalties they could incur, but there are also potential prison sentences too. This was shown in the case of James Liang, a former VW engineer who pleaded guilty to federal charges of conspiring to defraud regulators and vehicle owners.
Mr Potsch may well be treading on thin ice…
We can, of course, but speculate on the news that surrounds the scandal though!
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