Volkswagen’s ex-CEO pays company $14 million over his role in the diesel scandal

Martin Winterkorn has agreed to pay Volkswagen nearly $14 million after an investigation found the former CEO failed to respond properly to signs that the company may have been using illegal diesel engine technology.

He also failed to ensure that questions from US authorities about the German carmaker’s 2015 emissions scandal were answered “truthfully, completely and without delay,” the company said Wednesday.

The settlement with Volkswagen was announced as German prosecutors charged Winterkorn with giving false testimony to a 2017 parliamentary inquiry. He said he was first informed that some diesel Volkswagen cars had been equipped with software that could be used to cheat on emissions tests in September 2015. But according to prosecutors, he had known since May 2015.

Volkswagen said in a statement that it decided earlier this year to seek compensation from Winterkorn and former Audi CEO Rupert Stadler following an investigation conducted by law firm Gleiss Lutz that was “by far the most comprehensive and complex investigation carried out in a company in German economic history.”

The former Volkswagen CEO attended a meeting in July 2015 at which key features of the so-called “defeat device” were discussed. Given his role and responsibilities, he should have tried to get to the bottom of the matter, the company said.

“Winterkorn did not obtain any knowledge of the use of software that was unlawful under US law on 27 July 2015, nor did he knowingly accept this,” Volkswagen said in a preliminary report by its executive and supervisory boards. “He did however receive specific indications of possibly unlawful functions in … diesel engines developed by Volkswagen.”

A lawyer for Winterkorn did not immediately respond to a request for comment on Wednesday.

The report published by Volkswagen concludes that Winterkorn was not involved in the development of the defeat devices used to cheat on emissions tests. But he did “negligently breach his duties of care” by failing to “further clarify, comprehensively and promptly, the circumstances behind the use of unlawful software functions.”

Winterkorn was CEO of Volkswagen between 2007 and 2015. He resigned one week after the scandal burst into public view, setting off years of investigations, fines and settlements that have cost Europe’s largest carmaker at least $39 billion and sullied its reputation. According to the report, Winterkorn denied through his lawyers that he breached his duties of care.

Still, the former CEO has agreed to pay the company €11.2 million ($13.7 million). Stadler, who has been accused of failing to investigate whether diesel engines developed by Audi were also rigged to cheat on emissions, has agreed to pay €4.1 million ($5 million). He also rejected the allegations against him, according to the report.

Volkswagen said it would receive an additional €270 million ($329 million) from an insurance policy covering its directors and officers.

Volkswagen has struggled for years to draw a line under the scandal, even as it invests tens of billion of dollars to develop and produce electric vehicles. It continues to face lawsuits from consumers, investors and environmental groups in Germany and other countries around the world.

German prosecutors charged Winterkorn with fraud in 2019. He was indicted by US federal prosecutors in 2018 on charges of wire fraud and conspiracy, and faced related accusations from the US Securities and Exchange Commission.

Volkswagen said in its report Wednesday that it does not expect further revelations related to the scandal: “No new material findings with regard to the responsibilities of the current and former board members under civil law are to be expected.”

The settlements with Winterkorn and Stadler will be put to a vote of Volkswagen shareholders on July 22.

— CNN’s Stephanie Halasz contributed reporting.