German prosecutors probe bonus payments to suspended VW manager

FRANKFURT — German prosecutors are investigating a possible breach of fiduciary duty by Volkswagen Group over bonus payments made to an unnamed executive who was suspended over the automaker’s emissions-cheating scandal.

Regulators blew the whistle on VW in 2015 after the German company was caught using software designed to cheat emissions tests on diesel engines.

VW has argued the cheating was the work of a handful of engineers who acted without the consent or knowledge of members of the management board, which at the time included VW’s current CEO Herbert Diess and Chairman Hans-Dieter Poetsch.

Prosecutors in Brunswick, in VW’s home region of Lower Saxony, said on Tuesday they were now investigating why one VW manager received bonus payments while suspended. According to German paper Bild am Sonntag, the manager received 866,000 euros ($ 974,000) in bonuses between 2016 and 2018.

The prosecutors declined to identify the manager. VW declined to comment on the payments.

The manager is among five VW executives, including former CEO Martin Winterkorn, to face criminal charges for conspiring to cover up the automaker’s diesel-emissions cheating scandal. The German newspaper Handelsblatt named the four other executives facing charges in Germany as Hans-Jacob Neusser, VW’s former head of engine development; Jens Hadler, former director of powertrain development; Hanno Jelden, who led engine electronics; and Thorsten D. Neussers, a department head.

Prosecutors have said that between November 2006 and September 2015, Winterkorn and the other managers failed in their duty to inform authorities about systematic emissions cheating. The VW managers could face up to 10 years in prison.

The automaker has argued that although it was informed about the use of software to help pass emissions tests, lawyers advising the company had cautioned against informing the authorities because it was unclear the software was illegal.

Regulators later said that VW had crossed the line from using legitimate software programs to protect engines from damage, known as Auxiliary Emission Control Devices (AECD), to using an illegal “defeat device” which the U.S. Environmental Protection Agency (EPA) defines as software which “reduced the effectiveness of the emission control system.”

VW has said it also stopped short of informing shareholders about the software before the regulatory announcement because it felt potential fines would not exceed 150 million euros ($ 168 million). So far the scandal has cost VW more than 29 billion euros.

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Section Page News – Automotive News

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