U.S. charges ex-VW exec with fraud

Volkswagen AG's former Chief Executive Officer Martin Winterkorn was charged in a Michigan federal court with conspiracy and wire fraud in relation to an investigation into the German automaker's efforts to cheat U.S. diesel emissions testing, according to an indictment unsealed Thursday.

Winterkorn, who stepped down from his role as CEO days after the scandal was revealed, is accused of conspiring to defraud the U.S. and to violate the Clean Air Act. The charges were filed under seal in Detroit on March 14.

"The indictment unsealed today alleges that Volkswagen's scheme to cheat its legal requirements went all the way to the top of the company," Attorney General Jeff Sessions said in a written statement. "These are serious allegations, and we will prosecute this case to the fullest extent of the law."

Winterkorn is the highest-ranking person to be charged in the three-year investigation, yet he's also unlikely to ever face trial in the U.S. Germany doesn't extradite its citizens to countries outside the European Union, so Winterkorn won't be arrested unless he leaves Germany.

Winterkorn's lawyer in Germany, Felix Doerr, didn't reply to an email seeking comment.

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

Volkswagen admitted in September 2015 that it outfitted about 11 million diesel cars worldwide with a defeat device, embedded software that allowed the vehicles to recognize when they were being tested in laboratory conditions and reduce emissions to meet acceptable levels. According to the indictment, Winterkorn was briefed on both the emissions issue and how U.S. regulators were threatening to delay certifying 2016 cars for sale, at a July meeting in Wolfsburg, Germany, where the company is based.

The carmaker pleaded guilty in January 2017 to using false statements to import cars into the U.S. and to obstructing investigations, and paid $4.3 billion in penalties. Two other employees have pleaded guilty over their role in the affair, and five other executives have been indicted by the U.S. and remain in Germany, avoiding arrest. They include executives who led engine development as well as the failed efforts to design a diesel engine that would meet the tougher emissions standards the U.S. adopted for 2007, as well as another liaison to U.S. regulators.

Volkswagen's new CEO, Herbert Diess, pledged earlier Thursday that the German manufacturer would step up compliance systems to prevent the sort of misconduct that set off the deepest crisis in the company's history. Diess spoke for the first time in his new role as CEO at the company's annual shareholder meeting in Berlin after Volkswagen abruptly replaced Winterkorn's successor, Matthias Mueller, last month.

Volkswagen Chairman Hans Dieter Poetsch said in Berlin that an internal investigation into the roots of the scandal was ongoing and that the manufacturer "constantly explores" possible damage claims from employees who were involved in the cheating, including former board members.

The Winterkorn indictment focuses on the July 27, 2015, meeting in Wolfsburg, where Winterkorn and several other senior leaders were briefed about the diesel irregularities. Winterkorn at that meeting "approved the continued concealment of the cheating software from U.S. regulators," according to the indictment.

The wire fraud relates to August 2015 emails that Winterkorn was copied in on regarding Volkswagen's attempts to deceive U.S. regulators through Oliver Schmidt, Volkswagen's compliance liaison, according to prosecutors. Schmidt pleaded guilty in 2017 and was sentenced to seven years in prison.

Information for this article was contributed by Ryan Beene, Christoph Rauwald and Karin Matussek of Bloomberg News.

Business on 05/04/2018

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