As Volkswagen workers in Germany brace for news of big job cuts, expected on Wednesday, the executive accused of overseeing widespread diesel fraud has finally gone on trial.
Former VW chief executive Martin Winterkorn, once the most powerful man in German business, is not accused of direct responsibility for the fraud, exposed nine years ago. Instead, he allegedly failed to intervene when he found out and failed to inform markets promptly.
This hesitation, so goes the prosecution case presented at Braunschweig regional court on Tuesday, allowed the sale of nine million cars which failed to meet emissions rules. To date the scandal has cost the German carmaker an estimated €30 billion globally, with damage to VW customers estimated at €100 million.
For health reasons, the case against the 77-year-old Mr Winterkorn did not proceed in 2021 alongside other managers accused of devising the so-called diesel “defeat device”.
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Arriving in court on Tuesday, looking greyer and older, Mr Winterkorn said he was “doing fine”. Asked by journalists how he looked back on his life’s work, he replied: “When I see the beautiful cars, then happily.”
Asked what he expected from the trial, he added: “Let’s wait and see.”
The defeat software could detect when a car was on a test ramp — wheels moving, steering wheel immobile — or on the street. In the former situation, the software activated a filter for noxious nitrogen dioxide; otherwise the software deactivated the filter and cars emitted up to 35 times the legal limit of nitrogen dioxide.
The case against the other four managers is set to continue into the new year. The state has already settled investor fraud charges against two former senior managers, ex-chief executive Herbert Diess and VW chairman Hans Dieter Pötsch.
Beyond commercial fraud and market manipulation charges, Mr Winterkorn is also accused of lying to a 2017 parliamentary inquiry when he said he “knew nothing” of the fraud before September 2015.
As part of the 600-page indictment presented on Tuesday, prosecutors flagged a May 2014 memo to Mr Winterkorn, containing test information from the US that appears to confirm aberrations in on-road and test emissions.
Prosecutors also allege US-based VW executives told the then chief executive how they had “screwed” inquisitive US environmental authorities.
Mr Winterkorn confirmed his identity to the court but otherwise did not speak. The court said the “unusually extensive” case against him is likely to continue for some time, with 90 court dates already set in the coming 12 months.
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Defence lawyer Felix Dörr said his client “rejects the allegations made against him”.
“We are firmly convinced that all allegations against him can be refuted,” he continued in a trial pause. “In this respect, we’re looking forward calmly to the trial.”
Less calm are VW workers in its Wolfsburg headquarters and around the country after news the company plans to cancel its job guarantee — introduced in 1994 — for about 110,000 German employees.
At a crisis summit on Monday, the executive board said it was seeking €5 billion in cost cuts through restructuring of VW passenger and commercial vehicles divisions — and its component plants.
“The economic situation has become more serious, in addition, German competitiveness has slipped,” said VW group chief executive Oliver Blume. “In this environment, we have to act consequentially.”
The news has been met with forceful union pushback, with the IG Metall union warning that VW “doesn’t need revenue Rambos”.
“The board has presented a plan that shakes VW to its foundations and endangers both jobs as well as factory locations,” said Mr Thorsten Gröger, IG Metall head. “This path is not just short-sighted but hugely dangerous as it risks destroying the heart of Volkswagen.”
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