Dieselgate: VW gets £248 million in settlement with former execs

Volkswagen will receive €288 million (£248m) in compensation payments after reaching a settlement with four former executives, including ex-CEO Martin Winterkorn and former Audi boss Rupert Stadler, over the diesel emissions scandal.

The settlement is a major step in the German firm’s attempt to move on from the Dieselgate scandal, in which it admitted using illegal software to rig US diesel emissions tests. Volkswagen has so far paid out more than £27.5 billion in fines, vehicle rectification and legal costs related to the scandal. Both Volkswagen and Porsche are still facing billions in shareholder claims.

Under the agreement, Winterkorn will pay €11.2m (£9.7m), with Stadler paying €4.1m (£3.5m). Former Audi executive Stefan Knirsch will pay €1m (£860,000), with former Porsche exec Wolfgang Hatz paying €1.5m (£1.3m). Volkswagen will also receive €270m (£233m) in compensation payments from D&O insurance.

Volkswagen initially blamed the emissions scandal on a small number of engineers. The agreement with the four executives was made following a review of liability claims conducted on behalf of VW’s supervisory board by law firm Gleiss Lutz.

The law firm’s investigation found that Winterkorn had breached his duty of care as VW chairman by failing to “clarify the circumstances” of the original claims, and in failing to ensure questions from US authorities were answered truthfully.

The report found that Winterkorn was not involved in the development or use of the defeat devices, but that he was negligent in failing to clarify the circumstances of the software use after he was informed of it in July 2015. Notably, Winterkorn discussed the defeat devices during a ‘damages roundtable’ on 27 July 2015, in which several VW engineers told him the use of the devices was, in their view, unjustifiable. He was given “specific indications of possibly unlawful functions” in the sofrware, with the report finding he should have “given top priority to pursuing these indications” following the meeting, but failed to do so.

Notably, the report confirmed for the first time that that Herbert Diess, the current chairman of the Volkswagen Group, attended the ‘damages roundtable’ in July 2015 where Winterkorn was involved of the defeat devices. But the investigators ruled that Diess did not breach any of his duties because Diess had only just joined the VW Group at the time of the meeting, and was not responsible for solving any problems with US authorities. As a result, the report found “he was justified in trusting” that the relevant VW bodsies would look into the possibly illegal software.

The report found Stadler had breached his duties of car by failing to ensure that diesel engines fitted to Audi, Porsche and VW vehicles from 2016 onwards were not fitted with the illegal software.

The agreement still needs to be approved at Volkswagen’s annual general meeting in July.

Volkswagen said former Audi executive Ulrich Hackenberg is “not prepared to reach an agreement”. Audi’s supervisory board has asked for legal action to be taken against him.

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In a separate development, German prosecutors have charged Winterkorn with giving false testimony for telling the German parliament he only became aware of the defeat devices in September 2015. The indictment charge is that he was aware of their use in May 2015.