VW Diesel Fraud Trial Starts Over Scandal That Won’t Go Away

(Bloomberg) --

Four ex-Volkswagen AG managers stood trial in Germany accused of fraud for their part in the diesel-rigging scandal that cost the company billions and tarnished its reputation.

The trial -- starting six years after the scandal broke -- is the first criminal case to target executives at VW’s German headquarters who allegedly backed the idea of dodging emission tests with a software trick. The managers were charged in 2019 with having vehicles equipped with a so-called defeat device in that case that covers 9 million cars sold in Europe and the U.S. 

“As executives, they were decisively responsible for the fact that emissions rules were transgressed in Europe and the U.S.,” prosecutors said at the start of the trial in Braunschweig on Thursday. “The rules were in place to protect the environment and the health of people.”

Volkswagen settled the criminal probe three years ago by paying 1 billion euros to German prosecutors. The diesel-emissions scandal has so far cost the carmaker more than 30 billion euros ($35.3 billion), including hefty sanctions that were part of a deal with U.S. authorities. The company is still facing civil litigation in its home country, including a 9 billion-euro investor class action.

The long-awaited trial has been postponed twice because of the coronavirus pandemic and hearings are expected to stretch into 2023. 

VW’s former Chief Executive Officer Martin Winterkorn was originally charged alongside the four ex-managers but his trial was postponed due to health reasons. The 74-year-old has repeatedly denied the allegations. 

Annette Voges, an attorney for Heinz-Jakob Neusser, VW’s former engine development chief, asked for the case to be stayed as prosecutors have still not completed the probe and new evidence emerging continuously.

“Until this very day it’s unclear who was allegedly deceived by whom over what in this case,” she said.   

Andreas Mross, a defense lawyer for Thorsten D., the lowest ranking of the accused, said his client repeatedly told his supervisors the device was illicit. But his efforts were rebuffed and he was called a “worrywart” by bosses. In August 2015, a month before the scandal broke, Thorsten D. disclosed the software manipulation to U.S. authorities despite instructions from VW to conceal it, said Mross.  

Thorsten D. then has cooperated with with both the U.S. authorities and German prosecutors, providing them with information which later became the basis for the charges in this trial, his lawyer said,

“My client is acknowledging his mistakes,” Mross said “But he shouldn’t be among the people to stand trial here today.”

Lawyers for the two other defendants will comment on the case at the next hearing scheduled for Sept. 21.

It’s in the interest of the staff, the shareholders and the company as a whole that the facts that lead to the diesel crisis will be brought to light completely, Volkswagen said in an emailed statement. The court will determine what responsibility individuals may have had, the carmaker added.

Alongside the fraud charges, the accused will be tried on tax-evasion allegations. Since the cars received tax breaks for their seemingly reduced emissions, the government lost out on 820,000 euros, according to the charges.

©2021 Bloomberg L.P.