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Ex-Volkswagen CEO faces criminal charge in US over diesel scandal

May 05, 2018 00:00:00

WASHINGTON/FRANKFURT, May 04 (Reuters): The US Justice Department has filed criminal charges against former Volkswagen AG Chief Executive Martin Winterkorn, accusing him of conspiring to cover up the German automaker's diesel emissions cheating.

The indictment, filed in secret in March, was unsealed in US District Court on Thursday as Volkswagen held its annual meeting in Germany. Winterkorn resigned days after the scandal over polluting vehicles in the United States became public in September 2015.

US Attorney General Jeff Sessions, Environmental Protection Administration chief Scott Pruitt and other senior Trump administration official issued statements criticizing VW with the indictment, a rare instance of a CEO being subjected to criminal prosecution for corporate actions.

"If you try to deceive the United States, then you will pay a heavy price," Sessions said.

In contrast with Volkswagen, no individuals were charged at Toyota Motor Corp in connection with its sudden unintended acceleration scandal or at General Motors Co for the cover-up of a deadly ignition switch defect.

The federal government's decisions not to prosecute senior banking industry executives over the 2007-2009 financial crisis also has drawn fire from advocates of tougher measures to deter corporate wrongdoing.

The US indictment of Winterkorn is likely to be largely symbolic. As a German citizen, he is almost certain not to go to the United States and to seek protection under German extradition law. The former CEO is also under investigation by German authorities.

A source close to Winterkorn told Reuters on Friday that Winterkorn is in Germany, and will remain there.

Volkswagen settled criminal charges with the US Justice Department in 2017 and agreed to a $4.3 billion payment. In total, VW has agreed to spend more than $25 billion in the United States to address claims from owners, environmental regulators, states and dealers.

The company also has offered to buy back about 500,000 polluting US vehicles. Many are now stored in parking lots around the United States.

Volkswagen has been fighting to move past the emissions scandal, vowing to spend billions on a number of new electric vehicles as it has seen US sales rebound.

The indictment reopens the question of whether other senior VW executives knew about the scandal and threatens to prolong the crisis. VW shares slipped 0.2 per cent by 0915 GMT.

Winterkorn, 70, is charged with four felony counts, including conspiracy to defraud the United States, wire fraud and violating the Clean Air Act from at least May 2006 through November 2015 after the company admitted using illicit software that allowed Volkswagen diesel vehicles to emit excess pollution without detection.

A lawyer for Winterkorn in Germany did not immediately comment. Winterkorn in January 2017 told German lawmakers he had not been informed of the cheating early and would have halted it had he been aware.

A Volkswagen spokesman in Germany said the company "continues to cooperate with investigations" of individuals but would not comment on Thursday's charges.

Three executives who were on the management board of Volkswagen at the time the scandal broke continue to hold senior positions within the company.

Hans-Dieter Poetsch, who was chief financial officer, is now chairman of the supervisory board. Herbert Diess now the company's chief executive, joined VW on July 1, 2015 as head of the Volkswagen brand only weeks before authorities blew the whistle on pollution on September 18, 2015.

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