US charges Volkswagen and ex-chief executive with defrauding investors
The charges come two years after the German motor giant settled with the US over criminal and civil charges in the emissions scandal.
US regulators have charged Volkswagen and its former chief executive Martin Winterkorn with defrauding investors during its massive diesel emissions scandal.
The charges from the Securities and Exchange Commission come two years after the German motor giant settled with the US over criminal and civil charges, as the company tried to distance itself from one if its darkest eras.
The SEC said Volkswagen issued more than 13 billion dollars (£10 billion) in bonds and asset-backed securities in US markets between April 2014 and May 2015, when senior executives knew that more than 500,000 vehicles in the country grossly exceeded legal vehicle emissions limits.
SEC charges Volkswagen, former CEO with defrauding bond investors during “clean diesel” emissions fraud https://t.co/Hy8anYnYrJ— SEC_News (@SEC_News) March 15, 2019
Volkswagen made false and misleading statements to investors and underwriters about vehicle quality, environmental compliance and the company’s financial standing, which gave VW a financial benefit when it issued securities at more attractive rates for the company, according to the SEC.
“Volkswagen hid its decade-long emissions scheme while it was selling billions of dollars of its bonds to investors at inflated prices,” said Stephanie Avakian, co-director of the SEC’s enforcement division.
In September 2015 VW installed software on more than 475,000 cars that enabled them to cheat on emissions tests, according to the Environmental Protection Agency.
The software reduced nitrogen oxide emissions when the cars were placed on a test machine but allowed higher emissions and improved engine performance during normal driving.
In 2016 the Justice Department sued VW over the emissions-cheating software and the Federal Trade Commission also sued the company, saying it made false claims in commercials promoting its Clean Diesel vehicles as environmentally friendly.
Martin Winterkorn resigned as CEO, saying he took responsibility for the fraud, but insisted he personally did nothing wrong.
The SEC said he did in the new complaint.
VW told the German dpa news agency that the SEC is repeating unsubstantiated claims against Winterkorn, who was not involved in any sales of bonds.
“Regrettably, more than two years after Volkswagen entered into landmark, multibillion-dollar settlements in the United States with the Department of Justice, almost every state and nearly 600,000 consumers, the SEC is now piling on to try to extract more from the company,” a statement said.
The company has paid 20 billion dollars (£15 billion) in fines and civil settlements. It has also pleaded guilty to criminal charges in the US and several managers, including Winterkorn, were charged there.
The surprise charges arrive as VW attempts to distance itself from the scandal. On Tuesday the firm said it planned to ramp up production of electric vehicles over the next 10 years, to 22 million, and reduce its carbon footprint over vehicle life cycles by 30%.
VW’s move to electric vehicles comes as it seeks to comply with new limits on carbon dioxide emissions in Europe, and a push by China for more low-emission vehicles.
The SEC’s complaint, filed in the US District Court for the Northern District of California, charges Volkswagen AG, its subsidiaries Volkswagen Group of America Finance and VW Credit, and Winterkorn with violating the anti-fraud provisions of federal securities laws.
The SEC seeks permanent injunctions, disgorgement of ill-gotten gains with prejudgment interest and civil penalties. It also wants to bar Winterkorn from holding any corporate officer or director positions.