VW’s Diesel-Cheat Profits Risk Seizure Under German Probeby
Braunschweig prosecutors open probe allowing company sanctions
Procedure was used in 600 million-euro Siemens settlement
German prosecutors widened a probe of Volkswagen AG’s emissions cheating, potentially paving the way for hundreds of millions of euros in penalties on top of the $15.3 billion U.S. settlement.
Prosecutors invoked a procedure as part of their criminal probe of employees that allows them to ask courts to fine the company as well, Klaus Ziehe, a spokesman for the investigators in Braunschweig, said by phone. Fines can only be levied if the probe finds a top manager or board member guilty of wrongdoing linked to the scandal.
The disclosure comes as European prosecutors and regulators have been under fire for failing to force Volkswagen into concessions similar to those in the U.S., in particular regarding compensation to consumers. While Germany doesn’t allow for prosecution of companies under criminal laws, an administrative probe is the tool prosecutors can use to seek sanctions. Siemens AG, which faced the same type of review during its corruption case, settled with Munich prosecutors for 600 million euros ($662 million).
Ziehe declined to specify the date the probe was opened, saying it was some weeks ago and that the company had been notified “a while ago.” VW hasn’t yet replied to the letter from prosecutors, he said.
Volkswagen spokesman Eric Felber said the company received the letter informing it about the process. Sueddeutsche Zeitung reported the step earlier.
The shares rose 1.9 percent to 112.20 euros at 1:55 p.m. in Frankfurt. Volkswagen has dropped 16 percent this year, compared to a 9 percent decrease in the benchmark DAX Index.
If prosecutors can prove that Volkswagen executives violated their duties leading up to the cheating, fines could include the profits made from the cars affected. Volkswagen installed the cheating software, which turned on full pollution controls only during official tests, in about 11 million vehicles around the world.
The potential amounts are likely to dwarf any fines the nation’s transport regulator could have levied, which the government last week said it won’t seek. Volkswagen is also facing a separate criminal probe in the U.S.