VW Porsche Unit Settles German Diesel Probe for $599 Million
(Bloomberg) -- Volkswagen AG’s Porsche sportscar unit agreed to pay 535 million euros ($599 million) to end a probe into rigged diesel engines, bringing the total amount of fines in its home country to more than 2.3 billion euros.
The carmaker won’t appeal the order which was levied as part of an ongoing criminal investigation targeting managers at the Porsche brand, the Stuttgart prosecutors office said in a statement on Tuesday. The penalty covers the sale of cars since 2009 that were equipped with V6 and V8 engines from VW’s sister brand Audi.
Porsche itself never developed diesel engines but prosecutors found that its managers failed to properly supervise their use in the vehicles, the company said. Volkswagen added a provision for the fine in the first quarter and the unit will book the impact in the second quarter.
Volkswagen has now ended all probes by German prosecutors against its units over the sale of rigged cars. It last year settled with Braunschweig investigators for 1 billion euros and Audi followed by paying 800 million euros to Munich prosecutors. Parent company VW said last week the overall impact of the diesel crisis has now reached 30 billion euros.
But VW’s diesel woes are far from over. Braunschweig prosecutors last month indicted former Chief Executive Officer Martin Winterkorn and three other managers over the scandal. The same authority is due to decide whether to charge the current CEO, Herbert Diess, and Chairman Hans Dieter Poetsch as well as Winterkorn over allegations they failed to inform investors about the scam in a timely manner. The company may also face another fine in that probe. VW and the men deny the allegations.
VW added provisions of 1 billion euros in the first quarter and Tuesday’s fine didn’t eat up the complete amount. Further impact may come from customer claims after VW suffered a setback at Germany’s top civil court in a ruling earlier this year. Just weeks later, judges hearing a 9 billion euro investor lawsuit indicated they may lower the burden for shareholders to show what the company knew when about the illicit conduct.
Stuttgart prosecutors are still conducting similar cases against Robert Bosch GmbH as well as Daimler AG over diesel-rigging allegations.
VW’s Porsche unit was made a suspect in the case in January, almost a year after prosecutors raided the company in the criminal probe that was pending since 2017. Last year, Joerg Kerner, head of engine development at Porsche, was taken in custody as part of the raids but released three month later.
©2019 Bloomberg L.P.