VW could face further fines from German authorities

BRUNSWICK, Germany — Volkswagen Group could face additional fines in Munich and Stuttgart on top of the 1 billion euros ($1.2 billion) it has been told to pay for management lapses which caused emissions cheating on 11 million VW diesel cars.

Prosecutors in Munich said they are examining whether to impose fines on VW’s premium division, Audi, for its role in manipulating V-6 and V-8 diesel engines. That would be in addition to 1 billion-euro fine from prosecutors in Brunswick for violations tied to 4-cylinder diesel engines.

Stuttgart prosecutors, who have launched a probe against employees at Daimler, Porsche, and supplier Robert Bosch, said they too may consider the use of an administrative order. “In all these proceedings it is possible that a regulatory offense procedure will be carried out, we are still evaluating this possibility,” a spokesman for the Stuttgart prosecutor’s office said on Thursday.

Prosecutors in Brunswick in VW’s home state of Lower Saxony used a so-called administrative order to fine VW for oversight problems that allowed millions of polluting VW cars to hit the road.

The fine is one of the biggest ever penalties imposed by German authorities against a company. It deals yet another blow to one of Germany’s big industries which is struggling to recover from the fallout from the emissions-cheating scandal that broke in Sept. 2015.

The 1 billion-euro fine is not included in the 25.8 billion euros ($30 billion) that the automaker has set aside to cover costs related to its admission that it cheated U.S. diesel-emissions tests, and it will hit earnings, analysts at Evercore ISI said.

But shareholders should welcome the move since it marks an end to some of the criminal proceedings against the automaker, they added.

However, that is not the end of VW’s legal problems.

Timing issue

Prosecutors in Brunswick are also investigating VW executives including chairman Hans Dieter Poetsch and CEO Herbert Diess to see if they informed investors in a timely fashion about the scale of potential fines faced by the automaker for cheating U.S. emissions tests.

The company denies any wrongdoing by its executives.

Brunswick said it may rule on the matter in the coming months. The town is the main legal jurisdiction covering VW’s headquarters in the German town of Wolfsburg.

“On market manipulation, it is possible that there will be a decision this year. A decision does not necessarily mean bringing charges, it could mean closing the proceedings,” Brunswick prosecutor Klaus Ziehe said at a news conference.

In a filing submitted to a Brunswick court on Feb. 28, Volkswagen argued it did not violate corporate disclosure rules because it did not understand the scope of potential fines and claims faced by the company.

Four days before U.S. regulators blew the whistle on VW, Poetsch – the company’s chief financial officer at the time – saw the potential financial risk from emissions violations at 150 million euros, the court filing shows.

U.S. authorities disclosed Volkswagen’s systematic emissions cheating on Sept. 18, 2015, sparking the biggest business scandal in the company’s history and triggering a crackdown on emissions across the industry.

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