Volkswage AG said in a statement Sunday that German prosecutors have extended an investigation into alleged market manipulation to include two board members including chairman Hans Dieter Poetsch.
VW has admitted installing cheating software that gave false results on emissions tests on more than 11 million diesel vehicles sold worldwide.
German investigators are trying to determine if the senior executives knew about the cheating but covered it up. The company publicly admitted wrongdoing in late September 2015.
In a U.S. settlement, VW agreed in June this year to spend up to $14.7 billion to resolve federal and California civil allegations of cheating on emissions tests and lying to customers.
The settlements didn’t resolve federal criminal liability.
VW CEO Martin Winterkorn resigned in September 2015.
A New York Times report in February this year said internal Volkswagen documents raised the possibility Winterkorn “knew of possible emissions cheating by the company sooner than he has said.”
Chairman Poetsch hadn’t been implicated in the cheating scandal before VW’s announcement Sunday.
In September this year, a Volkswagen engineer who worked in Germany and the United States pleaded guilty in federal court in Michigan to helping create the cheating software.
James Robert Liang, 62, of Newbury Park, California faces up to five years in prison for conspiracy to defraud the United States, to commit wire fraud, and to violate the Clean Air Act.
Liang is cooperating with U.S. authorities.
The Braunschweig prosecutor’s office announced the market manipulation investigation in June. The first targets were Winterkorn and VW brand chief Herbert Diess.
The New York Times story said Winterkorn may have learned about the cheating in May 2014, more than a year before the company’s public admission.
VW is controlled by the Porsche and Piech families. The German state of Lower Saxony is VW’s second biggest shareholder with 20 percent of the voting rights.
Poetsch was VW’s CFO from 2003 until October 2015, when he became chairman.
The company’s statement Sunday said the board believes it met its legal duties with prior disclosures about the cheating.
The statement said VW and Pötsch “will continue to give the inquiries by the public prosecutor’s office their full support.”
The cheating software has also been found in some Audi models sold in the United States. Audi is VW’s luxury brand.
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Here’s the full statement of November 6, 2016 from Volkswagen AG on the investigation by the Braunschweig public prosecutor’s office:
Volkswagen AG announces that the Braunschweig public prosecutor’s office has extended its investigation against two members of the Company’s Board for alleged market manipulation to include Hans Dieter Pötsch. Based on careful examination by internal and external legal experts, the Company reaffirms its belief that the Volkswagen Board of Management duly fulfilled its disclosure obligation under German capital markets law. The proceedings refer to the period during which Hans Dieter Pötsch served as the Group Chief Financial Officer. The Company and Hans Dieter Pötsch will continue to give the inquiries by the public prosecutor’s office their full support.
Richard L. Cassin is the publisher and editor of the FCPA Blog.