ZCZC
BCN-14
GERMANY-ECONOMY-AUTOMOBILE-TRIAL-VW
VW faces first big German court date over ‘dieselgate’
FRANKFURT AM MAIN, Sept 10, 2018 (BSS/AFP) – The first major German court
case against Volkswagen over the “dieselgate” scandal that has shaken up the
car industry gets under way Monday, as investors pursue the world’s largest
automaker for billions in compensation.
From 10 am (0800 GMT) the regional court in Brunswick will examine 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.
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 more
than 200 questions common to some 3,650 claims totalling 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.
After markets closed on Friday, September 18 that year, 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.
Ahead of Monday’s hearing, Volkswagen lawyer Markus Pfueller said the
group was “confident” that it had “complied with its disclosure obligations
toward shareholders and the capital markets”.
So far, dieselgate has cost VW more than 27 billion euros in fines,
vehicle buybacks and recalls and legal costs, mostly in the US.
MORE/HR/1018
ZCZC
BCN-15
GERMANY-ECONOMY-AUTOMOBILE-TRIAL-VW 2 FRANKFURT AM MAIN
– ‘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
authorisation 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” 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.
Another investor probe starting Wednesday, against Porsche SE, the holding
company with a controlling stake in VW, could be stalled or superseded by the
Brunswick case.
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.
MORE/HR/1020
ZCZC
BCN-16
GERMANY-ECONOMY-AUTOMOBILE-TRIAL-VW 3 LAST FRANKFURT AM MAIN
– Driving bans –
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 comes 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,
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.
BSS/AFP/HR/1022