Prosecutors target former VW boss Winterkorn

It has taken millions of euros and nearly a year and a half, but German prosecutors have finally trained their sights on the former top management of diesel emissions cheat Volkswagen.

For more than a year, the blame for the Dieselgate emissions scandal seemed certain to remain isolated to a small cadre of middle managers but the suspect list has suddenly ballooned to include former Volkswagen Group Chairman and CEO Dr Martin Winterkorn.

Public prosecutors in Braunschweig, the capital of the German state that governs Volkswagen’s home town of Wolfsburg, this week expanded its list of Dieselgate fraud suspects from 21 managers and engineers to 37.

In a statement, the prosecutor’s office insisted it had evidence to suggest that Dr Winterkorn “has known of the (diesel emissions) manipulation software and its effects earlier than he admitted”.

If proven, the allegation would have huge implications not just for Dr Winterkorn, but for the more than €10 billion in investor class-action lawsuits the company faces in Europe for the delay in telling the share market about the scandal.

Dr Winterkorn resigned in September 2015, proclaiming his innocence and insisting he had only been informed of the software-based NOx emissions cheat in the same month.

The prosecutors, who raided 28 homes and offices and sifted through millions of megabytes of data and emails, said that the files they had and the interviews they had completed suggested otherwise.

It has already been a bad start to 2017 for current and former Volkswagen Group senior managers, with serving senior manager Oliver Schmidt arrested trying to return home from Florida after his Christmas holidays with his family.

The US Department of Justice (DOJ) concurred withe the German prosecutors that senior management knew of the scandal far earlier than they admitted, alleging ex-Volkswagen US environment and engineering head Schmidt was the driving force behind a year-long cover up even though other senior managers had voted to immediately cooperate with the US Environmental Protection Agency (EPA).

The DOJ charged five more senior managers with criminal offences, though only two of them could really be classified as top-level managers, with suspended Volkswagen Group development boss and management board member Heinz-Jakob Neusser the highest ranking.

Besides those charged with crimes in the US (and Schmidt, who has faced court in handcuffs already), seven more have been charged in South Korea.

The Volkswagen Group bought its way out of US criminal prosecution by buying off the DOJ with a $US4.3 billion settlement, but that doesn’t cover individual employees. Those charged are unlikely to be extradited to the US, though the threat of extradition would clearly hamper their travel freedoms even inside Europe.

“We can’t put companies in jail, but we can hold their employees personally accountable,” FBI deputy director Andrew McCabe insisted.

Besides Schmidt and Neusser, the others charged in the US were Jürgen Peter, Richard Dorenkamp, Bernd Gottweis and Jens Hadler.

Of those, Hadler was the head of engine development at Volkswagen from May 2007 until March 2011, when he suddenly and mysteriously left the company after being hailed as its new development golden boy.

Dorenkamp was the in charge of Volkswagen’s engine development after-treatment department, while Peter began heading up the company’s quality management and product safety group in 1990 and still does.

On the surface, the charging of the retired Gottweis seems odd, as the investigation showed he not only warned Volkswagen managers that breaching U.S. emissions laws could land them in U.S. jails but also wrote an email in 2014 to Dr Winterkorn to warn him of the cheat.

Gottweis headed up quality management until 2014 and was considered the company’s conscience, technically heading up the global group that was supposed to protect it from questionable product decisions like Dieselgate.

According to German publication Bild, Gottweis wrote to Dr Winterkorn on May 23, 2014, to warn him “it can be assumed that the regulator will investigate the VW-systems for the presence of a cycle-beating function in the engine controller software (so-called defeat device).”