Former executives pay mega bucks to say sorry.
Volkswagen's Dieselgate scandal is well-documented by now, but far from over. The emissions cheating problem was first discovered on the Volkswagen Jetta, but the scandal grew to include both Audi and Porsche. The German firm has so far paid nearly $40 billion in fines, legal costs, and vehicle repairs. Still to come, Volkswagen and Porsche have to make good on shareholder claims, which will cost another few billion.
Now the main role players responsible for the scandal have agreed to pay VW more than $350 million in compensation. The key players are Martin Winterkorn (ex CEO), Rupert Stadler (Audi), Stefan Knirsch (Audi), and Wolfgang Hatz (Porsche). Winterkorn has to cough up the most: $13.72 million. Standler will pay $4.95 million, while Knirsch will be down $1.2 million. Hatz will fork over $1.84 million. In addition to these paybacks from the previous executives, Volkswagen will also receive nearly $330 million from its insurer, D&O.
After discovering the cheating software, VW blamed a rogue group of engineers. But a scandal this size demanded a thorough investigation, which found that several high-ranking executives were also responsible. A former VW boss based in the US, Oliver Schmidt, was sentenced to four years in prison in 2017 for his role in Dieselgate. He was charged with defrauding the US government and violating the Clean Air Act. Schmidt paid the highest price, even though he was the one person who briefed then CEO Winterkorn of the possible legal actions.
A well-known German law firm Gleiss Lutz was commissioned to conduct the investigation, which implicated the four men mention earlier. As VW's Chairman, Martin Winterkorn was the most high-profile guilty party.
While it's true that he wasn't involved in the development of the software or gave the instruction to design it, he breached his duties by not clarifying the use of the software after he was informed about it. Winterkorn was first informed at an internal meeting in late July 2015. He was told about the legal implications but failed to provide the US with full details after the scandal broke just two months later.
Basically, he failed to live up to his duties as the CEO by not acting immediately and truthfully. Former Audi executive, Ulrich Hackenberg, has not reached an agreement yet. So Audi's next step is to take further legal action against him.
VW will be holding its annual general meeting in July, at which time the compensation payments will be accepted or declined.