Volkswagen AG’s ex-Chief Executive Officer Martin Winterkorn denied duping customers and taking too long to alert markets about diesel-emission cheating, telling a German criminal court he was never properly informed about the vast scale of the scam.
Winterkorn said that he isn’t guilty of fraud and rebuffed accusations that as early as May 2014 he knew about the rigging of diesel emissions in VW autos that made them seem more environmentally friendly than the reality.
“I’m not an engine developer, I’m not an emissions control specialist and I’m not a software expert who took care of engines and emission cleaning systems,” Winterkorn said on the second day of his trial. “At the time, I didn’t understand what the technical problems were, nor did I realize that VW had already been on the US market with illegal software applications for years.”
Nine years after the diesel emission scandal Winterkorn, 77, is on trial in Braunschweig over the affair that sparked global outrage and triggered his departure from the company in September 2015, just days after US authorities disclosed their investigation. VW, which is now considering factory closures in Germany for the first time in its 87-year history, has paid out more than €30 billion ($33 billion) over the scandal.
Winterkorn isn’t charged with being involved in inventing the so-called defeat device. Instead, he is accused of committing fraud by not stopping it once he learned about it just over a decade ago — thus allowing 9 million cars to be sold with the software in Europe and the US, causing a total of €100 million of harm to customers.
A second charge alleges that Winterkorn dragged his feet to inform markets about the emission rigging. The third alleges Winterkorn lied while testifying at a parliamentary inquiry in January 2017.
His job as a CEO was to make long-term strategic decisions and not to micromanage technical problems, the former boss told the judges. The VW brand had a huge division for engine development and he was dependent on its mangers to inform him comprehensively and truthfully — but that didn’t happen in the diesel affair, he said.
Even in mid-2015, when U.S. authorities were investigated, the exact details of the scam weren’t fully disclosed to him and he wasn’t involved in the discussions with regulators. He also thought there was a software solution at hand that would have settled the issue. That’s why he, but also no one else at the company, didn’t see any need to inform markets about it, he said.
VW sold about 60,000 to 80,000 vehicles per year in that segment in the U.S. The number was low compared to VW’s total sales in the U.S. and almost insignificant on a global scale, said Winterkorn. So the allegation that he was afraid of losing profits was baseless, he added.
“Had I realized that an illegal software was behind the high emissions and that there was a considerable legal risk for VW, I would have intervened immediately and stopped any further sales and deliveries of diesel vehicles in the U.S.,” he said.
Presiding Judge Johannes Mühe reported that the parties after Tuesday’s hearing met to discuss a potential deal — without any result. Prosecutors want Winterkorn to confess to wrongdoing while his lawyers say their client can’t admit anything inferring intent as that would carry huge liability risks for him and could even reverse a €11 million settlement he closed with VW.
The parties had already met several times earlier this year to discuss a settlement. Prosecutors are under time pressure as the market manipulation charges may expire withing one year. Winterkorn’s lawyer told the judges that the case would need to examine each and every car sold in the U.S. as it wasn’t clear they were always sold to consumers. Even if they were, there may not have been any financial harm as, unlike in Europe, there was never any risk that US regulators would order them off the roads.
As the vast majority of cars under review in the case were sold in the US, that review could take years. Winterkorn’s health may deteriorate and this could jeopardize the case altogether, his lawyer Stefan Kirsch said.
