Uh-oh: Volkswagen bosses learned about Dieselgate weeks before investors

July 10, 2017

In the U.S., much of the drama surrounding the Volkswagen Dieselgate scandal has begun dying down. In Germany, however, the probe into Volkswagen's misdeeds is going full tilt, and reports indicate that investigators are now focused on a damning bit of evidence involving the company's top brass.

You might recall that some of those executives, including former CEO Martin Winterkorn, have been the subject of much discussion in recent months. Among the biggest questions that investigators want to know is what Winterkorn knew and when he knew it. 

Why is that important? Because under German law, if executives learn of any news that could affect a company's stock price, they're required to disclose it in a timely fashion. If Winterkorn found out about the defeat devices that allowed 11 million Volkswagen vehicles to cheat on emissions tests and he said nothing to investors, he'd be breaking that law. Moreover, it would look as if Winterkorn himself were colluding with the engineers who designed the illegal devices.  

Unfortunately, German newspaper Bild am Sonntag reports that that's exactly what happened. The paper says that Winterkorn and other executives were informed of the company's illegal activity in a presentation given on August 25, 2015. They were told that the scandal could cost Volkswagen up to $18.5 billion.

The presentation itself was given by Oliver Schmidt--the same Oliver Schmidt who was arrested in January while trying to flee the U.S. (Schmidt was formerly the staffer in charge of ensuring that Volkswagen's American vehicles complied with federal regulations. No prizes for guessing why he might've been trying to make a getaway.)

Details about the presentation were uncovered during the U.S. investigation of Volkswagen, possibly during interrogations of Schmidt. The information was then handed over to those in charge of the German probe.

What does it all mean?

The good news, if there is any, is that the revelation lines up with Winterkorn's previous statement that Volkswagen executives only learned about the existence of the defeat devices in late August of 2015, just a few weeks before the scandal began making headlines. 

The bad news is that there's no guarantee that Winterkorn or his team hadn't heard of the devices before that presentation. And for Winterkorn, there's still the question of whether sitting on this bombshell for three-and-a-half weeks constitutes alerting investors in a timely manner. 

And the worst news is that Bild am Sonntag reports that the August presentation wasn't the first Winterkorn had heard of the defeat devices. He and Herbert Diess (who's still employed by Volkswagen) had also been told about it at a meeting on July 25, 2015. 

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