This. Is. Huge.
German prosecutors have announced they have formally charged Volkswagen's top executive brass with market manipulation in relation to the diesel emissions scandal, also known as Dieselgate, which was exposed in 2015. Current CEO Herbert Diess, former Chief Financial Officer and now Chairman Hans Dieter Poetsch, and former CEO Martin Winterkorn have all been accused of stock market manipulation, according to the Associated Press.
They allegedly informed markets too late about the huge costs the automaker would incur as a result of the scandal. This essentially means the accused improperly influenced the company's share price. Volkswagen immediately rejected the charges. This is particularly troubling new for Diess because he's in the midst of launching VW's all-new electric vehicles, which got underway earlier this month at the 2019 Frankfurt Motor Show with the ID.3.
As early as this February, the US market version, a crossover potentially dubbed the ID.4, will debut. As Reuters notes, lawyers for Diess claim he could not have been involved in the stock manipulation because he was hired in July 2015. Dieselgate was exposed in September 2015. Diess claims he will fight the charges while remaining at his CEO post. Winterkorn, however, will likely have far greater difficulty proving his innocence. He had been VW CEO for several years prior to the scandal's revelations. Prosecutors allege he had been aware of the issue and its ramifications since at least May 2015. Poetsch allegedly knew since June 29 and Diess since July 27.
For its part, Volkswagen claims it "meticulously investigated" what happened over the past four years, working with internal and external legal experts. VW's supervisory board realized there could be charges against its current and former top brass one day, so it wanted to have its own version of events well prepared. Good thing too because VW's stock has since dropped by 2.4 percent since the charges were announced earlier today.
Meanwhile, VW is "confident that the allegations will prove to be unfounded." The diesel emissions scandal was first made public by US authorities on September 18, 2015, claiming VW deliberately installed cheating software in its diesel-powered vehicles that switched on pollution controls when said vehicles were being tested. The software then turned off these controls during regular every day driving.
VW has paid around $33 billion in fines along with recall costs and other settlements. Even though VW has made a $50 billion investment in electric vehicles and associated technologies, it seems it still cannot permanently shed its Dieselgate past.