What do the investigators say to the managers?
The prosecutor Braunschweig has raised three charges on Tuesday: against VW CEO Herbert Diess, his predecessor Martin Winterkorn and the Chairman of the Supervisory Board and former CFO Hans Dieter Pötsch. The three top managers, according to the allegation, had informed their shareholders far too late about the diesel scandal and the imminent billions of penalties, with the intention of avoiding or at least delaying a price drop. If that is true, then the offense of "deliberate market manipulation" would be fulfilled, which is punishable by law with up to five years imprisonment.
What do the accused say?
All three accused deny the allegations.
Pötsch , who was chief financial officer in the period in question in the summer of 2015, has stated that "neither the deliberate manipulation of emissions nor the unprecedented severity of the US authorities' sanctions on Volkswagen" were foreseeable for him in the summer of 2015. For him no capital market legal relevance was recognizable. VW had estimated the potential damage - based on an opinion - to a maximum of 150 million euros, a significant impact on the share price was therefore not expected.
AFP
Hans Dieter Pötsch (archive picture)
Diess has repeatedly stressed that he is at peace with himself and have nothing to reproach .. "Neither the facts nor the legal situation justify the charge" of the prosecutor, his lawyers said after the indictment. The prosecution, however, are statements that burden Diess, Pötsch and Winterkorn. Accordingly, the accused managers were told in summer 2015 on various occasions that US diesel cars on the road too many nitrogen oxides emitted - and thus did not meet the approval standards. Also imminent fines, which go far beyond the then estimated by VW sums, should have been figured. Winterkorn had since May 2015 at the latest, Pötsch since 29.6.2015 and Diess since 27.7.2015 "full knowledge of the facts and the resulting significant damage consequences" had. Everyone would have had to "arrange for the necessary ad-hoc notification from that point on," said the prosecutor. The accused deny that.
RONALD WITTEK / EPA-EFE / REX
Herbert Diess (archive picture)
What's so special about the case?
Since this Tuesday, the current leadership of the world's largest automaker has moved into the center of the diesel affair. In the concurrent fraud case, in which it comes to account for the actual manipulation of diesel engines to account, are next to ex-chief Winter grain only subordinate executives accused. If the court admits the new charges of market manipulation, which is considered probable in litigation, then the two most powerful leaders of the largest German industrial group would have to answer in court. That would be a unique event in recent German economic history.
REUTERS
Martin Winterkorn (archive picture)
What do the charges mean for Volkswagen?
The charges are upsetting the group, but are not really surprising: Volkswagens Rechtsanwälte have long been expecting Diess, Pötsch and Winterkorn to be charged. While they emphasize that they consider the three accused innocent, they believe prosecutors want to crack down. It will probably take some time before the Braunschweig Regional Court decides whether the indictment will be allowed and if a court case will actually be opened. When the process starts then, it may cost him and Pötsch a lot of time to limit their work.
The reputational damage of an indictment is likely to put a strain on their work, however. The Supervisory Board of the Group must therefore decide quickly how to deal with the indictment. Pötsch himself will not be present at the debate, he must not decide on his own continued employment.
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Do Diess and Pötsch have to go now?
At least on the fast, that's unlikely. In recent weeks, it was said in the corporation, for both top executives, the presumption of innocence applies. The Supervisory Board has no interest in separating from Diess and Pötsch for a number of reasons. On the one hand, from the point of view of the inspectors, it would be difficult to exchange the boss and the chairman of the supervisory board in the midst of the greatest technical change in the history of the company - from the internal combustion engine to electric drives. For another, VW does not want to give the impression that Pötsch and Diess are involved in the diesel scandal. The company persistently adheres to the version, the affair is only the work of engineers below the board level. A departure of the top staff would look like a confession of guilt from VW's point of view - and fuel the billion-dollar damages claims of shareholders.
What chances do the charges have?
Market manipulation charges are, legally speaking, a highly complicated matter. It is very rare that managers have been convicted of this in the past, and most of the cases ended with fines or without conditions. The prosecution would have to prove that Diess, Pötsch and Winterkorn have not only failed to inform their shareholders, but that they have deliberately deceived the markets to influence the stock price. That should be difficult. Above all, it is argued that the defendants could predict with reasonable certainty how high the possible penalties for the diesel fraud might be and what the consequences for the share price would be the reputational damage resulting from the fraud. Nevertheless, the charges put the group under enormous pressure: Diess and Pötsch in the dock should give a devastating picture in public. It is a setback on the way to the promised new beginning.