Former VW CEO charged in Dieselgate scandal

Ian Thibodeau, Daniel Howes, and Nora Naughton
View Comments

Detroit — Former Volkswagen AG CEO Martin Winterkorn has been indicted on federal conspiracy charges to defraud the United States, to commit wire fraud and to violate the Clean Air Act.

Martin Winterkorn

The criminal indictment of the former VW CEO, who resigned under pressure in September 2015, makes him the highest-ranking official to be charged in what has become a costly global diesel-emissions cheating scandal for Germany’s No. 1 automaker.

The new charges, unsealed on the same day as VW’s annual general meeting in Berlin, amount to a fresh blow to the automaker’s credibility and its bid to recover from the costly “Dieselgate” scheme that has undermined confidence in diesel-engine emissions in the United States and Western Europe.

“The indictment unsealed today alleges that Volkswagen’s scheme to cheat its legal requirements went all the way to the top of the company,” U.S. Attorney General Jeff Sessions said in a statement Thursday. “These are serious allegations, and we’ll prosecute this case to the full extent of the law.”

Added U.S. Attorney Matthew Schneider of the Eastern District of Michigan: “Volkswagen deceived American regulators and defrauded American consumers for years. The fact that this criminal conduct was allegedly blessed at Volkswagen’s highest levels is appalling.”

The charges, dated March 14 but unsealed Thursday in Detroit, came days before Reuters reported that German prosecutors said they had searched VW’s headquarters in Wolfsburg, Germany, to investigate whether the automaker had overstated the fuel efficiency of more vehicles than previously disclosed.

“Volkswagen continues to cooperate with investigations by the Department of Justice into the conduct of individuals,” the company said Thursday in a statement. “It would not be appropriate to comment on individual cases.”

The indictment alleges that “on or about July 27, 2015,” Winterkorn received a briefing “on the situation in the United States” after learning U.S. regulators had “threatened not to certify VW model year 2016 vehicles for sale in the United States.”

Prosecutors say VW employees used a PowerPoint presentation to show Winterkorn “how VW was deceiving U.S. regulators, including precisely what had been disclosed to U.S. regulators and what information had not yet been disclosed.” It also described the “potential consequences of VW being caught” and recommended “partial disclosures” for “the existence of the cheating software.”

“Winterkorn agreed to this plan of action,” the indictment says.

Winterkorn, 70, is the only former executive newly charged under the latest, or “superseding,” indictment. The former CEO — a longtime ally of VW scion Ferdinand Piëch and a former head of VW’s vast technical development group — also was charged with additional counts of wire fraud, according to court documents.

Five former VW executives were charged in a previous indictment: Richard Dorenkamp, former head of VW’s engine development after-treatment department; Heinz-Jakob Neusser, former head of development for the VW brand; Jens Hadler, former head of the VW-brand engine development department; Bernd Gottweis, supervisor responsible for quality management and product safety; and Jürgen Peter, VW’s liason with U.S. regulators.

Volkswagen AG, Europe’s largest automaker, pleaded guilty in March 2017 to three criminal charges related to its decade-long conspiracy to evade U.S. emission standards. The company was fined a record-setting $2.8 billion and faces three years of probation.

In 2015, the company admitted to programming its diesel cars to trick emissions testers into believing the engines released far less pollution than they actually did. The so-called “defeat devices” allowed vehicles branded “Clean Diesel” to work properly during laboratory emissions testing. But in normal driving, the cars were found to emit up to 40 times more smog-causing nitrogen oxide than legally allowed.

In July 2016, Volkswagen reached a $14.7 billion civil agreement with the Environmental Protection Agency that calls for the automaker to spend $10 billion to buy back or repair about 475,000 2-liter diesel cars sold between 2009 and 2015. It also agreed to a $1.2 billion settlement with its American dealers.

Current and former Volkswagen executives were indicted in what regulators called a 10-year conspiracy to rig thousands of diesel cars to evade emission standards. Former Audi executive Giovanni Pamio, who is from Italy, reportedly was arrested by Munich authorities last July.

In late August, James Robert Liang, head of diesel compliance for Volkswagen from 2008 to June 2016, was sentenced to 40 months in prison and a $200,000 fine for his role in the worldwide scandal.

And last December, a federal judge in Detroit sentenced a former VW executive, Oliver Schmidt, to seven years in prison and fined him $400,000 for his role in the automaker’s diesel emissions scandal.

“This crime ... attacks and destroys the very foundation of our economic system: That is trust,” U.S. District Judge Sean Cox said in sentencing Schmidt. “Senior management at Volkswagen has not been held accountable.”

The furious backlash to Volkswagen’s duplicity drove Winterkorn to resign in September 2015, soon after the scandal broke. It was one of the rare executive departures in a transatlantic scandal that rocked so-called “Deutschland AG,” eroded confidence in one of Germany’s corporate pillars and forced the automaker to pay at least $16 billion in fines and settlements.

Twitter: @Ian_Thibodeau

View Comments