VW will get back $351M in diesel settlement with former execs

Automotive Industry

Source: Automotive News Europe, 2021-06-09

Volkswagen Group said it has reached agreement with former CEO Martin Winterkorn and three other former top executives over compensation for their involvement in the automaker's diesel-emissions scandal.

The settlement means VW receives €288m ($351m) in compensation related to the scandal that has cost the company more than €32bn in fines, refits and legal costs.

In a statement on 9 June, VW said:

  • Winterkorn has agreed to pay €11.2m of compensation

  • Rupert Stadler, former CEO of VW's Audi division, agreed to pay €4.1m

  • Wolfgang Hatz, VW Group's former top engineer, will pay €1.5m

  • Audi's former development head, Stefan Knirsch, will pay €1m

The automaker said it will also receive €270m from its directors' and officers' liability (D&O) insurances.

VW said that former Audi and VW executive Ulrich Hackenberg was not prepared to reach an agreement. Preparations will be made for legal action against Hackenburg, it said.

Hackenberg left the automaker in 2015 after being suspended in the wake of the scandal and was replaced by Knirsch. As investigations continued into the diesel scandal, Knirsch abruptly left in September 2016.

Hackenberg was the architect of VW Group's MQB platform, which underpins most of the automaker's internal combustion engine cars. 

VW said its supervisory board concluded that Winterkorn breached his duties of care by failing to "comprehensively and promptly" clarify the circumstances behind the use of unlawful software functions in diesel engines sold in the US between 2009 and 2015.

Winterkorn "also failed to ensure that the questions asked by the US authorities in this context were answered truthfully, completely and without delay," the statement added.

Stadler breached his duties of care by failing, in the period starting on 21 September 2016, to ensure that 3.0-litre and 4.2-litre diesel engines developed by Audi and installed in VW, Audi and Porsche vehicles were investigated with regard to unlawful software function, VW said.

VW's announcement comes Winterkorn was charged with giving false testimony about the emissions scandal to German parliament. The prosecution alleges he misled lawmakers in 2017 when giving testimony that he did not know about emissions cheating earlier than VW officially admitted.

VW said in late March it would claim damages from Winterkorn and Stadler for breaches of duty of care under stock corporation law. The law firm Gleiss Lutz carried out a review of liability claims on behalf of the automaker.

The compensation payments still must be approved by VW Group's annual meeting on 22 July.

The payments represent the highest of their kind in Germany. Over a decade ago, ex-Siemens CEO Heinrich von Pierer paid €5m in damages to his former employer.

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