Fraud and tax evasion: Ex-VW boss Winterkorn faces up to ten years in prison

The regional court of Braunschweig has approved the fraud charges against the former VW boss Martin Winterkorn. When the process starts is still open.

Martin Winterkorn is a former German business executive. He was CEO of Volkswagen AG from January 1, 2007 to September 23, 2015 and CEO of Porsche Automobil Holding SE from November 25, 2009 to October 31, 2015.

Almost five years after the exhaust gas affair at Volkswagen was exposed, the Braunschweig regional court has admitted fraud charges against ex-CEO Martin Winterkorn. The responsible chamber announced this on Wednesday. Winterkorn has to face the allegations in a public process – when the process will start is still open.

Investigators had indicted the 73-year-old manager in April 2019 for his role in the diesel scandal. It concerns allegations of serious fraud and violation of the law against unfair competition in connection with manipulation of the emissions values ​​of millions of vehicles.

“I am shocked by what has happened in the past few days. Above all, I am stunned that misconduct of this magnitude were possible in the Volkswagen Group.” These sentences are almost five years old, pronounced by Martin Winterkorn when he resigned from his position as CEO of Volkswagen on September 23, 2015.

The court admits charges against Winterkorn with amendments

Five days earlier, one of the biggest scandals in German economic history had become known, the millions of exhaust gas manipulations on diesel vehicles of the world’s largest automaker. He takes responsibility in the interests of the company, “although I am not aware of any wrongdoing,” said Winterkorn at the time.

The 73-year-old still has this point of view, but doubts about it have reached a new level with the admission of the indictment. The Braunschweig regional court has also admitted the indictment against four other (ex) managers of the group. Heinz-Jakob Neußer, the former development director of the VW brand, developer Jens H., a former head of drive technology and a department head, must also go to the dock with Winterkorn.

Particularly serious case of tax evasion

When the indictment was approved, the criminal chamber partially exacerbated the prosecutor’s allegations: instead of the accusation of serious fraud made by the prosecutor, the judges even suspect that Winterkorn and other managers have formed a gang for this purpose.

In the most extreme case, the defendants face prison terms of up to ten years. In the case of the accusation of vehicle tax evasion raised by the public prosecutor’s office, the judges suspect a particularly serious case because the damage could amount to up to 820,000 euros.

On the other hand, the court rejected the assumption of the public prosecutor’s office that the defendants were guilty of embezzlement towards the Volkswagen Group as unfounded from the outset. There is also no reason to suspect indirect false certification because the manipulation of the registration certificates is not covered by this section of the law.

Winterkorn’s defense sees the opening decision “as an expected consequence of the intensive and lengthy examination of the indictment” by the judges of the Braunschweig regional court, said Winterkorn lawyer Felix Dörr. The allegations against Winterkorn were limited in time and content to part of the charges raised by the public prosecutor. The defense welcomed the decision of the court because the procedure would be simplified.

The defense attorney of Neusser did not want to comment on the indictment. So far, the former executive board of the VW brand had always rejected the allegations. Neuss also protested in court against the cancellation of his employment contract by Volkswagen.

As the Braunschweig regional court added on Wednesday, the chamber sees Winterkorn as a sufficient suspicion that the manager could be convicted of commercial and gang fraud. That is why the opening of the main proceedings was allowed.

Main hearing not before January 2021

The buyers of certain vehicles from the VW group were deceived about the nature of the cars and especially the so-called shutdown device in the engine control software. As a result, compliance with nitrogen oxide emissions was only guaranteed on the test stand, but not in normal operation. The buyers would have suffered financial loss as a result, it said in a statement from the regional court.

A commercial criminal chamber of three judges examined whether there was sufficient suspicion. During the past few months, the court is said to have had some doubts about the arguments of the Braunschweig public prosecutor’s office. In autumn, Judge Christian Schütz asked the prosecutors for further explanations.

Observers assume that the main hearing will not start before January 2021. At the end of September there should be a conversation between the defense lawyers and the judges to fix the dates. Also due to Corona, it will take a few more months until the process is adequately prepared. The Munich judiciary is faster than its colleagues in Lower Saxony when it comes to the diesel affair: the legal proceedings against the former Audi CEO Rupert Stadler will start at the end of this month.

According to reports, the court requested, among other things, an expert opinion on the question of whether the software of the control units of the diesel vehicles in question actually contained an illegal program of deception.

Observers had actually expected that the trial against Winterkorn and other executives would have opened at the beginning of this year. In January, however, the public prosecutor’s office apparently had to rework: Some starting points in the indictment are said to be “not expedient”, and a “sufficient suspicion” is said to have not been in sight.

Accordingly, it was about the allegation of criminal advertising for manipulated diesel cars in the USA – and also the allegation of fraud because of the continued sale of such vehicles. However, the court now admitted the application.

Volkswagen described the opening of the main proceedings as “a further step in the legal processing against individuals”. It is in the company’s own interest to legally clarify the facts of the diesel crisis, said a spokesman. However, Volkswagen is not involved in the Winterkorn proceedings. The group has “full confidence” in the work of the regional court and is cooperating with the authorities.

The decision of the Regional Court of Braunschweig initially has no impact on possible recourse claims by the Volkswagen Group against its former chairman Winterkorn. “The supervisory board checks independently of ongoing proceedings,” said a group spokesman on Wednesday in Wolfsburg.

The group is thus maintaining the position it has taken since the diesel scandal was discovered almost five years ago. The company is investigating whether there are any possible claims for damages from Volkswagen against Winterkorn. These long-term reviews initiated by the VW supervisory board have still not come to a conclusion.

The diesel scandal cost VW billions

Group observers suspect that the supreme supervisory body of Volkswagen may only react after the legal proceedings have been concluded and only then take recourse against its former CEO. So far, Volkswagen has had to raise around 32 billion euros to deal with the diesel affair. The company could only claim a fraction of this amount from Winterkorn, probably a multi-figure sum.

The Braunschweig public prosecutor’s office has also brought charges against Winterkorn in a second trial. It is about possible market manipulation on the stock exchange. The prosecutor suspects that Winterkorn learned early on of the threatened billions in fines in the USA. The VW shareholders were informed too late.

The Braunschweig investigators had also brought charges against today’s VW supervisory board chairman Hans Dieter Pötsch and the current CEO, Herbert Diess. However, these proceedings were discontinued in early summer against payment of a monetary requirement of 4.5 million euros each. However, the manipulation procedure continued against Winterkorn.

In September 2015, Volkswagen admitted tampering with the emission levels of diesel cars after examinations by authorities and research by researchers in the USA. The software of certain engines was set in such a way that significantly more toxic nitrogen oxides (NOx) were emitted in actual operation on the road than in tests.

Author: Nabeel K

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