Volkswagen faces first major German court case over ‘dieselgate’ scandal
The first major German court case against Volkswagen over the “dieselgate” scandal that has shaken up the car industry got underway Monday, as investors pursue the world’s largest automaker for billions in compensation.
At 10:00 am (0800 GMT), a regional court in Brunswick began examining whether the auto giant should have informed investors sooner about so-called “defeat devices” it built into 11 million cars worldwide to fool regulatory emissions tests.
Packed with around 50 lawyers from Volkswagen and its shareholders and dozens of plaintiffs and curious locals, the hearing had to be moved to a convention center to fit all of the attendees.
On the first day, “we are hoping for first indications from the judges about their view of the facts and the legal position,” said Andreas Tilp, a lawyer representing investment fund Deka.
The shareholder’s “model case” against VW is supposed to clear up 193 questions common to some 3,650 claims totaling around 9.0 billion euros ($10.5 billion), with judges expected Monday to highlight timelines and priority issues in the massive case.
At issue is a 40-percent plunge in Volkswagen stock over two days in September 2015, which wiped billions off its market value.
Days earlier, US authorities accused the group of using the defeat devices — engine software designed to cut harmful emissions during regulatory tests, only to allow them to rise again during on-road driving.
Investors say they could have avoided painful losses had executives — who are legally obliged to share promptly any information that could affect the share price — informed them sooner of the cheating.
“I want to get back what we lost,” Hartmut Bleumer, who invested some 10,000 euros in the firm, told AFP as the hearing started.
So far, dieselgate has cost VW more than 27 billion euros in fines, vehicle buybacks and recalls and legal costs, mostly in the US.
– ‘Every nut and bolt’ –
Judges are expected to take at least until next year to rule.
Deka lawyers argue that board members knew about the fraud and should have revealed it between the offending software’s first deployment in 2008 and September 2015.
For its part, VW blames a handful of engineers acting without authorization for the scheme and says the information it had before the American authorities intervened was not significant enough to warrant warning capital markets.
At the centre of attention in the court case will be Martin Winterkorn, the trained engineer who claimed to know “every nut and bolt” of Volkswagen’s entire range of models and ran the company as chief executive from 2007 to 2015.
VW said in 2016 that Winterkorn — who stepped down after the scandal became public — was sent a “memo” in 2014 highlighting emissions irregularities in the manipulated EA189 engine, without confirming whether he ever read it.
Backed by government tax incentives, German and other European carmakers bet big on diesel in the 1990s and 2000s as a lower-carbon alternative to petrol engines.
But the “dieselgate” scandal has revealed the flipside of the technology: nitrogen oxides (NOx) emissions that can be harmful to health.
Investigations into Volkswagen and other manufacturers are dragging on.
Rupert Stadler, CEO of VW subsidiary Audi, is in custody on suspicion of fraud and issuing false certificates, and VW-owned Porsche, Mercedes-Benz manufacturer Daimler and components supplier Bosch are in prosecutors’ sights.
Meanwhile, the fallout for German society has been far wider-ranging.
The EU has toughened emissions testing with a new procedure known as WLTP, which came into force this month.
Car companies are hoping a flood of new battery-powered vehicles will help meet tighter fleet-wide CO2 targets that bite from 2021, rather than ever-more efficient diesels.
And courts are increasingly pressuring German cities to clean up their air, with a diesel ban on two major roads in Hamburg and city-wide exclusion zones for older vehicles coming in Stuttgart and Frankfurt.
Consumers have reacted to the prospect of more bans by shunning diesel vehicles, sending its share of the new car market plunging from 46.5 percent in August 2015 to 32.6 percent last month.
Potentially even more terrifying for carmakers is a law allowing collective class action-style lawsuits that Berlin aims to pass before the statue of limitations runs out for VW.
“Some two million owners could benefit,” Justice Minister Katarina Barley said in May.
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