Four years after the EPA blew the lid off emissionsgate by accusing Volkswagen of selling diesel cars equipped with 'defeat devices' to game emissions tests, two of the carmaker's former top executives have been hit with criminal charges in their native Germany.
The revelation, which quickly erupted into a worldwide scandal, caused Volkswagen shares to erase nearly half of their value in the days over the next few days.
Now, Volkswagen AG Chief Executive Herbert Diess, Chairman Hans-Dieter Pötsch, and former CEO Martin Winterkorn have been charged with misleading shareholders. Since there's a securities fraud angle to most major corporate crimes, it's not surprising to see prosecutors going with the angle that the executives failed to inform shareholders about their company's misdeeds, which would soon be disclosed.
According to WSJ, the "surprise" indictment shows prosecutors in Braunschweig, the district that has jurisdiction over Volkswagen’s Wolfsburg headquarters, clearly don't buy the company's defense: That its top executives had no way of knowing that the US investigation would lead to such massive losses.
According to Bloomberg, Bafin, Germany's financial market regulator, started the probe back in 2016. At first, it asked prosecutors to only investigate Winterkorn and Diess. But three months later, Poetsch was added as a suspect. Diess was chief of the VW brand at the time and had joined the company in July 2015, just months before dieselgate erupted.
'Surprise' indeed. Volkswagen shares were off 3.3% on the news as markets digested the possibility of more legal problems ahead for the carmaker.