Ex-VW Group CEO Martin Winterkorn finally before court (update)

Nine years after the dieselgate scandal, the former VW Group CEO Martin Winterkorn finally appeared before a German court Tuesday. He denied all allegations against him and pleaded not guilty. He will make a declaration on Wednesday concerning his involvement.

Winterkorn, aged 77, led the VW Group from 2007 to 2015. Under his leadership, the entire VW Group evolved from 330,000 to 600,000 employees worldwide, and sales rose from 6.2 to 10 million vehicles.

In 2015, an unparalleled automotive industry scandal broke out in the US over VW’s deliberate fraud in emission testing procedures. The so-called dieselgate scandal has already cost the VW Group over €33 billion in recalls (more than 11 million vehicles concerned), refunds, compensations, and jurisdictional fines. Winterkorn had to resign but departed with a very generous ‘golden handshake’.

The primary allegation against Winterkorn is that he already knew of the fraud in 2014 and manipulated the market by holding back crucial information for shareholders and other stakeholders about what had happened in his company. If judged guilty, the final condemnation can lead to a jail sentence of ten years.

Nine years later

Appearing before the court in Braunschweig (near the VW headquarters in Wolfsburg in the north-eastern part of Germany) was programmed for 2021 but was delayed due to the man’s fragile health.

Other VW Group top managers, including former Audi CEO Rupert Stadler, chief engine developer Wolfgang Hatz, and some other high-ranking engineers and managers, have already appeared before the court and been condemned.

The Court has planned some 90 hearings in a case that finally started yesterday. The case is foreseen to take a full year and end in September 2025.

Hans Dieter Pötsch, the group’s former CFO who was named President of the Supervisory Board after Winterkorn’s demise in 2015, and Herbert Diess, Winterkorn’s successor who turned the whole company around into the electric era, will be key witnesses in the trial.

In 2020, they both avoided jurisdictional action against them by paying a €9 million financial settlement. In a reaction to the start of Winterkorn’s trial, the VW Group has officially declared “not being implicated in the trial”.

On his first day at the trial, Winterkorn declared to journalists that he was feeling better and that his whole career in the automotive industry and at the helm of the VW Group had been inspired by “his love for good and beautiful cars”.

On Wednesday, Winterkorn replied more extensively to the allegations. He admitted to being closely involved in dieselgate and the fact that he was ultimately responsible, but he denied being implicated in the decisions that led to the fraud. “I was the CEO but no engine specialist and certainly not a software specialist.”

He added, “At the time, I wasn’t aware of the technical problems arising and that VW had used an emission control system that had not already conformed to the American market for a couple of years. I’m not an informatics specialist, and software is tough to read if you don’t know where to look.”

So, Winterkorn denies knowing about the whole dieselgate fraud scheme in advance. In our professional activities, we met Mr. Winterkorn on several occasions. We were always impressed by his knowledge of the industry in general and of every inch and bolt of his own company in particular. Several times, we saw him inspect the tiniest detail of a car with its torch pen.

It would be a big surprise that a man of his stature wouldn’t have known what happened in his company on this massive scale for so long, but the court will finally have the last say.