Volkswagen says that CEO Herbert Diess and Chairman Hans Dieter Pötsch will continue to lead the company despite criminal charges against the pair over alleged stock market manipulation.
German prosecutors indicted Diess and Pötsch on Tuesday, saying they failed to disclose the huge financial risks of the diesel scandal to Volkswagen shareholders in a timely fashion.
The company’s supervisory board, which held an extraordinary meeting on Wednesday, said in a statement that the indicted executives would stay in their jobs. That ensures stability for now at the top of the world’s biggest automaker as it tries to reinvent itself as an electric car powerhouse.
“Based on its own extensive and independent investigations since autumn 2015, the supervisory board still can … not see that the capital market was deliberately not informed,” it said.
Under German law, top executives must inform shareholders of information that can affect stock prices — such as considerable financial risks — as soon as they become aware of them.
Prosecutors have accused the two executives, along with former CEO Martin Winterkorn, of breaking those rules.
The indictments are the latest fallout from Volkswagen’s bombshell admission in 2015 that it had rigged millions of diesel cars worldwide to cheat on emissions tests, a scandal that has cost the company over $30 billion.
Shareholders were also hit hard: The company’s stock price plummeted by nearly 40% after allegations of cheating were finally made public in September 2015.
Volkswagen (VLKAF) said in a statement on Tuesday that the allegations are unfounded.
The carmaker, a lynchpin of the German economy that employs roughly 650,000 workers, has sought for years to turn the page on the scandal.
But investigations on both sides of the Atlantic have resulted in indictments against top executives, undermining claims by the company that senior managers were not aware of emissions cheating until late 2015.
German prosecutors said Tuesday that questions from American authorities about engine manipulation that began in 2014 and intensified in 2015 should have made the financial risks clear to Volkswagen executives.
Winterkorn, prosecutors said, had full knowledge of the situation by May 2015 at the latest. Pötsch and Diess were aware by June 29, 2015 and July 27, 2015, respectively.
Despite this, they failed to disclose the “explosive nature” of the issue to financial markets until September 18, 2015, in order to support the Volkswagen share price, prosecutors said.
The charges could prove a major impediment for Diess, who joined the world’s largest carmaker as head of its Volkswagen brand only months before the diesel scandal burst into view.
Diess was made CEO of the group, which includes Audi, Porsche and Skoda, in 2018. He has sought to move beyond the diesel scandal with an aggressive and expensive push into electric cars.
Volkswagen’s major shareholders include Qatar, which holds 17% of the voting rights, and the German state of Lower Saxony, which has 20%. The Porsche family holding company controls 52%.
Mark Thompson contributed reporting.