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Will VW scandal end with prison sentences?

The auto industry is no stranger to legal trouble. Though companies normally reach financial settlements with US authorities, individuals at Volkswagen could face criminal charges. Spencer Kimball reports from Chicago. The timing couldn't be worse for Volkswagen. Before the VW emissions scandal broke, the US Justice Department vowed in a memo to redouble its efforts to prosecute individuals in white collar criminal cases - and a new CEO is unlikely to change that calculation. In the aftermath of the 2008 financial crisis, federal prosecutors extracted massive financial penalties from investment banks. But only one Wall Street executive, Kareem Serageldin at Credit Suisse, was prosecuted and sentenced to time in prison. "There's recently been criticism that the government has too often been using settlements with corporations as the end of the game and not following through as much on individual prosecutions," Samuel Buell, who prosecuted corporate crime at the Justice Department, told DW. Amid this controversy, the Justice Department's Resources and Environment Division has launched an investigation into Volkswagen cheating on diesel emissions tests, according to Bloomberg and "The Wall Street Journal." "This is their first opportunity really in a high-profile case to show that they mean business by going after individuals," Peter Henning, an expert on white collar crime at Wayne State University Law School, told DW. "So, unfortunately for Volkswagen, they're a year too late." Settlements the norm All three of the world's top automakers have now been subject to criminal investigations. GM was charged with concealing faulty ignition switches linked to 124 deaths. The world's third-largest automobile company settled with the Justice Department for $900 million. No individuals were charged with a crime. Toyota faced Justice Department scrutiny for withholding information about a sudden acceleration problem linked to fatalities. The world's second largest auto company settled with the government for $1.2 billion, but still faces some 400 wrongful death and injury lawsuits. Again, no individuals were charged. Now the world's top-selling car company, Volkswagen, potentially faces criminal charges for installing software to cheat diesel emissions tests . Though the emissions scandal has not been linked to any deaths, expert Peter Henning believes individuals at the company could very well face criminal charges. "This is intentional misconduct," Henning said. "This is so blatant. This has been going on for years. This was corporate a decision." "It's a perfect storm for Volkswagen," he continued. "The firm and the individuals don't have a lot of excuses, and you have a Department of Justice looking to go after individuals." Potential criminal penalties According to Samuel Buell, there's a range of charges individuals at Volkswagen could face depending on how the facts of the case pan out. Submitting false statements is a crime, and it's also illegal to defraud the United States government. There could also be charges for defrauding consumers who bought the diesel vehicles in question. Sentencing would likely be based on the damage done to consumers and the environment measured in monetary terms. According to Buell, if the damages reach tens of millions or even hundreds of millions of dollars, individuals could face stiff prison sentences. "You could be looking at five or 10 years," said Buell, a law professor at Duke University. "It's important to know that there's no parole in our federal prison system. The sentences are real. When a judge says five or 10 years, that's basically what you get." But holding individuals accountable in the corporate context is difficult, according to Brandon Garrett, author of "Too Big to Jail: How Prosecutors Compromise with Corporations." Prosecutors have described difficulty in determining responsibility amidst complex corporate structures. "The complexity of organizations where many people work together with many levels of supervisors and consulting lawyers and other specialists can all make assigning blame a challenge if there is no 'smoking gun' type evidence," he said.

The auto industry is no stranger to legal trouble. Though companies normally reach financial settlements with US authorities, individuals at Volkswagen could face criminal charges. Spencer Kimball reports from Chicago. The timing couldn’t be worse for Volkswagen. Before the VW emissions scandal broke, the US Justice Department vowed in a memo to redouble its efforts to prosecute individuals in white ... Read More »

Reports: Porsche CEO to become new VW chief

The supervisory board of German carmaker Volkswagen is to pick Porsche chief Matthias Müller as its next CEO, media reports say. He's to replace Martin Winterkorn, who resigned over a falsified emission tests scandal. The head of sports carmaker Porsche, Matthias Müller, would be appointed as Volkswagen's new chief executive on Friday, Reuters and the German business daily "Handelsblatt" reported, citing "sources familiar with the matter." "Bloomberg" also carried a similar report earlier on Thursday. Müller would replace Martin Winterkorn , who resigned on Wednesday in the wake of a huge scandal over manipulated emissions tests in the US and elsewhere, affecting some 11 million vehicles. Reuters reported VW's supervisory board would offcially present the new man at the helm after a meeting on Friday. Tall order Müller is the VW Group's former head product strategist and earned more laurels while being in charge of Porsche. The 62-year-old had been seen as the main favorite for replacing Winterkorn. Born in Chemnitz in East Germany, he originally trained as a tool maker and then graduated in information technology. He'll be facing the daunting task of fully clearing up the company's current scandal and regaining the trust of consumers worldwide.

The supervisory board of German carmaker Volkswagen is to pick Porsche chief Matthias Müller as its next CEO, media reports say. He’s to replace Martin Winterkorn, who resigned over a falsified emission tests scandal. The head of sports carmaker Porsche, Matthias Müller, would be appointed as Volkswagen’s new chief executive on Friday, Reuters and the German business daily “Handelsblatt” reported, ... Read More »

VW’s Winterkorn promises to fully clear up emissions scandal

VW CEO Martin Winterkorn has said he deeply regrets the current emissions cheating scandal surrounding the German carmaker. He said everything was being done to fully clear up the case as quickly as possible. In a video statement on the corporate website, Volkswagen Chief Executive Martin Winterkorn on Tuesday said he was "terribly sorry" for the emissions cheating scandal that had rocked the German auto maker. Winterkorn emphasized the scam "contradicted everything that Volkswagen stands for." "I formally apologize to our customers, the authorities and to the public in general for this misconduct," he said in the online video. The CEO promised that the scandal would be fully investigated, adding that all facts needed to be put on the table as quickly as possible and with the greatest possible degree of transparency. Heads to roll? Winterkorn provided no hint as to whether he'd step down from his post as a result of the scandal. He said it would be an error if the "huge mistakes of a few people were seen as a reason to place the honest work of 600,000 people under blanket suspicion; that's why I'm asking for your trust as we continue on our way. Workers' representatives on VW's supervisory board had reportedly pushed for heads to roll. "We can assure you that we will do everything possible to ensure the matter is cleared up quickly and that personnel consequences are drawn," Works Council chief Bernd Osterloh told employees on Tuesday. On Tuesday, it emerged that the emissions fixing could be a global problem - not just one in the US - with as many as 11 million cars from the Volkswagen AG family potentially affected. The cases revolve around diesel-powered models. VW's share price, already reeling from a difficult day's trade on Monday, was down almost 20 percent on Tuesday at around 106 euros ($118) per share. In March this year, the same stocks were selling for more than 250 euros each.

VW CEO Martin Winterkorn has said he deeply regrets the current emissions cheating scandal surrounding the German carmaker. He said everything was being done to fully clear up the case as quickly as possible. In a video statement on the corporate website, Volkswagen Chief Executive Martin Winterkorn on Tuesday said he was “terribly sorry” for the emissions cheating scandal that ... Read More »

Crisis could spread for VW beyond US

Volkswagen troubles could spread to important Chinese and European markets, as share prices tumble and the German auto giant faces hefty fines. As Volkswagen stocks plummeted after it admitted to rigging U.S. emissions tests, the auto giant could face further investigations in Europe and the important Chinese market where sales slipped earlier this year, say analysts. Volkswagen lowered its yearly sales forecast in July following weakened demand in China, where the German automaker delivers more than 40 percent of its vehicles. The latest revelations that it fitted some diesel cars in the US with software that gave false emissions data could be a further hit for the group in an "extremely important" market, Sven-Michael Werner, an attorney specializing in the automotive sector at the Bird & Bird's law firm in Shanghai. "I'm sure the Chinese regulators are looking into the matter in the US very closely and at whether similar instances would have occurred here," Werner told DW. "That's the typical pattern with overseas compliance issues. They will probably look at it unofficially at first and if they find anything there would be a formal investigation," said Werner, although, he added diesel cars are much less popular in China compared to other markets. US environment regulators ordered the German auto giant to recall nearly 500,000 diesel cars, including the VW Golf, when it emerged it used in-car software that met clean-air standards during testing but not during real-world driving conditions. The company could also face up to $18 billion (16 billion euros) in fines and its stocks tumbled more than 2o percent on Monday morning at the Frankfurt stock exchange. Diesel: Popular in Europe Diesel cars are immensely popular in the European Union where carmakers have been touting it as efficient and relatively clean fuel following improvements in quality over the past few years. In 2013, 53 percent of all newly registered cars in the EU had diesel-powered engines, while the diesel VW Golf has been the most popular car model in Europe for a number of years, according to the International Council on Clean Transportation (ICCT). But now the German government is also calling on carmakers for information to ascertain whether they were involved in falsifying car emissions data. "We expect from manufacturers reliable information so that the Federal Motor Transport Authority or KBA can investigate whether similar manipulation has taken place in Germany or in Europe," a spokesman for the environment ministry, Andreas Kuebler, told reporters on Monday. German rivals Daimler and BMW said the accusations directed at VW did not apply to them. Still analysts say it remains unclear whether other automakers had broken the rules. The scandal could also do untold damage to Germany's reputation as a leading car-making economy. "This has to be taken exceptionally seriously," Ferdinand Dudenhoeffer, a professor at Duisburg-Essen University, said. "This impacts the entire German automotive sector." US: Further struggles In the first half of 2015, Volkswagen surpassed Toyota as the world's largest automaker. Despite reaching that long-standing goal, the group has struggled in the US market where its strategy has been to promote its "clean diesel technology" as being better for the environment. In 2013, the VW America launched its "newest, most fuel efficient, TDI Clean Diesel engine" to power the 2015 Golf, Beetle, Passat and Jetta - all of which have been part of the U.S. recall – underlining its diesel strategy there. VW car sales have slipped in the North American market over the past few years, with diesel vehicles making up around a quarter of sales in the US. Ingo Speich, a fund manager at Union Investment, which owns about 0.4 percent of VW shares, said he expected the crisis to spread for the carmaker that makes vehicles from budget Seats and Skodas to luxury Bentleys and Lamborghinis. "The market is anticipating more than just the U.S. issue. We have to admit that just looking at the facts there is a huge loss of trust in management. That is the main issue," he said.

Volkswagen troubles could spread to important Chinese and European markets, as share prices tumble and the German auto giant faces hefty fines. As Volkswagen stocks plummeted after it admitted to rigging U.S. emissions tests, the auto giant could face further investigations in Europe and the important Chinese market where sales slipped earlier this year, say analysts. Volkswagen lowered its yearly ... Read More »

VW CEO under pressure as stock crashes

Shares in German carmaker Volkswagen have nosedived after it admitted to rigging US emissions tests. VW has halted all sales of diesel vehicles there and calls are mounting for CEO Winterkorn to resign. Shares in German auto giant Volkswagen (VW) fell more than 20 percent in morning trading at the Frankfurt stock exchange on Monday in reaction to revelations that some of its diesel cars in the United States had been fitted with software that gave false emissions data. In a statement on Sunday, the carmaker had said that the US Environmental Protection Agency (EPA) and the California Air Resources Board (CARB) had "detected manipulations that violate American environmental standards" while testing VW diesel cars. Chief executive Martin Winterkorn issued an apology and said he had ordered an external investigation into the matter. "The board of management takes these findings very seriously. I personally am deeply sorry that we have broken the trust of our customers and the public," Winterkorn said. Sales stop Meanwhile, the Volkswagen Group has ordered its dealers in the United States to halt all sales of the latest diesel models of its Volkswagen and Audi brands. The EPA said on Friday the software in these models deceived regulators measuring toxic emissions. Cynthia Giles, an enforcement officer at the EPA, said the cars in question "contained software that turns off emissions controls when driving normally and turns them on when the car is undergoing an emissions test". On the road, the cars were emitting as much as 40 times the level of pollutants allowed under clean air rules, Giles added. Volkswagen could face civil penalties of $37,500 (33,100 euros) for each vehicle not in compliance with federal clean air rules. Some 482,000 four-cylinder VW and Audi diesel cars sold since 2008 are involved in the allegations. If each car involved is found to be in noncompliance, the penalty could amount to $18 billion, an EPA official confirmed during a telephone conference on Friday. VW CEO Martin Winterkorn said the German carmaker would fully cooperate with US regulators, and added that the company would "not tolerate violations of any kind of our internal rules of law." Calls for the CEO to resign According to Ferdinand Dudenhöffer, automobile expert with Germany's Duisburg-Essen University, the chief executive is part of VW's problem and not the solution. He assumes Winterkorn must have known about the manipulations. "This component has received official clearance for all markets from the VW Development Department. The head of this department is Martin Winterkorn," Dudenhöffer told DW. "VW's board of directors needs to go on the offensive during a meeting scheduled for Friday to stem the fallout of the scandal. But this can only be achieved without CEO Winterkorn, I believe," he added. Bärbel Höhn, the head of the German parliament's environment commission, also said she thinks the deceptive software device couldn't have been installed without the CEO's approval. Höhn, a member of the environmentalist Greens Party, added she wouldn't be surprised if other carmakers are also found to have resorted to manipulations to meet tightened emissions standards in the United States and Europe.

Shares in German carmaker Volkswagen have nosedived after it admitted to rigging US emissions tests. VW has halted all sales of diesel vehicles there and calls are mounting for CEO Winterkorn to resign. Shares in German auto giant Volkswagen (VW) fell more than 20 percent in morning trading at the Frankfurt stock exchange on Monday in reaction to revelations that ... Read More »

US accuses Volkswagen of evading clean air standards

US regulators have called German carmaker Volkswagen out for intentionally violating clean air standards. If the allegations are true, the Wolfsburg-based company could face billions of dollars in fines. The US Environmental Protection Agency (EPA) on Friday accused Volkswagen of deliberately circumventing clean air rules on nearly 500,000 diesel cars, by using software that evades the agency's emissions standards. The feature, known as a "defeat device," detects when the car's emissions are being tested and turns on full emissions control systems only then. During normal driving situations, the controls are turned off, the EPA said. This could result in cars releasing as much as 40 times more emissions allowed under clean air rules meant to ensure public health is protected," Cynthia Giles, an EPA enforcement officer, told reporters in a teleconference. Public threat "Using a defeat device in cars to evade clean air standards is illegal and a threat to public health," she said. Prior to issuing the violation notice, the EPA said it worked with the California Air Resources Board and would continue to investigate "these very serious matters." If the allegations turn out to be true, Volkswagen could face penalties of up to $18 billion (15.8 billion euros). The German automaker said it is cooperating in the investigation. The recall affects about 482,000 diesel passenger cars sold in the US since 2009.

US regulators have called German carmaker Volkswagen out for intentionally violating clean air standards. If the allegations are true, the Wolfsburg-based company could face billions of dollars in fines. The US Environmental Protection Agency (EPA) on Friday accused Volkswagen of deliberately circumventing clean air rules on nearly 500,000 diesel cars, by using software that evades the agency’s emissions standards. The ... Read More »

Merkel wants car industry’s support for refugees

Opening the IAA Motor Show in Frankfurt, German Chancellor Angela Merkel has urged the domestic auto industry to offer vocational training and jobs for refugees. She said their integration required everyone's support. German Chancellor Angela Merkel used her Thursday visit to the IAA Motor Show in Frankfurt to urge domestic carmakers to intensify their efforts to help as many refugees as possible. "We are an attractive country," Merkel said. "Many refugees expect us to help them with the integration process." The Chancellor called on carmakers to provide internships, vocational training and jobs for refugees while thanking companies for the endeavors already undertaken in this direction. Merkel said she was confident the integration of refugees would be successful in a nation boasting a robust labor market and high employment. Risky technologies? In her address to auto makers attending this year's IAA, Merkel also praised the companies' efforts towards autonomous driving, but warned that secure data transmission and data protection were vital issues for consumers. She told the German VDA auto industry association that she was determined to continue her commitment to free trade agreements with Canada, the US and Japan. Merkel also touched on the sensitive issue of e-mobility, aware of the fact that the German government's plan to get 1 million e-cars onto German roads by 2020 might not come off in view of lackluster consumer demand. She told carmakers in the country that Berlin would reach a decision still this year on what additional incentives the government was willing to provide to boost production and demand for electric cars.

Opening the IAA Motor Show in Frankfurt, German Chancellor Angela Merkel has urged the domestic auto industry to offer vocational training and jobs for refugees. She said their integration required everyone’s support. German Chancellor Angela Merkel used her Thursday visit to the IAA Motor Show in Frankfurt to urge domestic carmakers to intensify their efforts to help as many refugees ... Read More »

World’s biggest brewers to merge?

Beer and soft drink maker Anheuser-Busch InBev wants to take over rival SABMiller from the UK. Should the deal come about, the two companies would control no less than a third of the global beer market. Anheuser-Busch InBev, the world's biggest beer maker, approached rival SABMiller about a takeover, the two companies confirmed Wednesday. A merged group would have a combined market value of around $270 billion (240 billion euros), based on current prices. It would combine AB InBev's dominance of Latin America with SABMiller's strong presence in Africa, both fast-growing markets, as well as strengthen their position in Asia. Britain-based SABMiller, the world's No. 2 brewer, said on Wednesday that it had been informed by its bigger Belgian rival that it intended to make a takeover bid, but it did not have any further information about the terms. "The board of SABMiller will review and respond as appropriate to any proposal which might be made," it said. "There can be no certainty that an offer will be made or as to the terms on which any offer might be made." AB InBev responded by confirming its approach to SABMiller's board. "AB InBev's intention is to work with SABMiller's board toward a recommended transaction." Shares in SAB, which owns such brands as Peroni, Grolsch and Pilsner Urquell, were up more than 20 percent. Anheuser-Busch InBev, which has Budweiser, Stella Artois and Corona, saw its shares jump 7 percent before trading was suspended. Big Brewers slicing up the global market There has been speculation of such a mega-merger for years, with the global beer market being increasingly dominated by big multinationals. One key area of concern to regulators would be the combined group's market share in the United States, where AB InBev controls almost half the market and SABMiller's joint venture with Molson Coors just under 30 percent.

Beer and soft drink maker Anheuser-Busch InBev wants to take over rival SABMiller from the UK. Should the deal come about, the two companies would control no less than a third of the global beer market. Anheuser-Busch InBev, the world’s biggest beer maker, approached rival SABMiller about a takeover, the two companies confirmed Wednesday. A merged group would have a ... Read More »

‘Immigration an opportunity for Germany’

Bundesbank chief Jens Weidmann has called the current influx of refugees an opportunity for the German economy. He warned, though, that the integration process would not be easy in the years ahead. The head of the German central bank, Jens Weidmann, said Wednesday the current influx of refugees presented a huge challenge for Germany, but also an opportunity in the face of the country's ageing population. "Coping with the influx of refugees will demand a lot from Germany," Weidmann told the "Süddeutsche Zeitung" daily in an interview. "But it also brings with it opportunities." The Bundesbank chief made it clear that those opportunities hinged on a successful integration of the newcomers into society and the domestic labor market. Stepping into the breach Weidmann emphasized that given the demographic change in Europe's powerhouse with a rapidly ageing society as a result Germany needed additional workers in order to maintain its prosperity. Estimates put the number of qualified workers that Germany will lack by 2020 at 1.8 million. Weidmann warned that although the German economy was currently in a good shape, it would not be in such a comfortable situation forever, adding there was no reason "to rest on our laurels." "The current recovery will come to an end at some point; in the longer term, Germany faces substantial challenges such as increased competition form emerging economies and the continued switch from fossil fuels to renewable energy." Weidmann said migrants could play a crucial role in helping to meet those targets.

Bundesbank chief Jens Weidmann has called the current influx of refugees an opportunity for the German economy. He warned, though, that the integration process would not be easy in the years ahead. The head of the German central bank, Jens Weidmann, said Wednesday the current influx of refugees presented a huge challenge for Germany, but also an opportunity in the ... Read More »

IMF changing tack on Greece

Latin Americans and Asians are happy that they do not need the help of the International Monetary Fund (IMF). But, Europe can no longer function without it. What's behind the IMF's interest in Greece? With loans totaling approximately $25 billion, Greece is currently the International Monetary Fund's (IMF) most important customer. "The IMF has crossed the 'point of no return'," says Rolf J. Langhammer from the Kiel Institute for the World Economy in northern Germany. "Basically, it should have walked away at an earlier point in time. Now, it's too late." The economist from Kiel, who has advised international organizations like the World Bank, the EU and German ministries, understands well why many of the 188 members of the IMF are not enthusiastic about the fund's extraordinary attentiveness to Athens. Many developing countries feel that Greece is a rich European industrial country. "Many developing countries think, 'you have always been tough with us but you are always making exceptions for the rich Europeans,'" says Langhammer. They wonder why they should have to pay for a country in the euro zone. The professor feels there is a "great deal of logic" behind the question. Change of direction in Washington? It seems paradoxical: The term debt relief is a taboo in Latin America, Asia and Africa but that is exactly what Greece asked the IMF for. On August 14, the head of the IMF, Christine Lagarde, made the organization's position clear by saying, "It is crucial for Greece's debt sustainability that its European partners commit themselves to significant debt relief, which goes far beyond the measures taken so far." The IMF's concerns about the sustainability of Greek debt, however, actually reflect self-interest. "We know that from the Latin American debt crisis in the 1980s," recalls the economist Langhammer. "Then they argued that a haircut would increase the chances serving the interest payable on the remaining debt." Does the fund simply defend the interests of its members by investing their money well? "The IMF is shouting as loud as it can so that no one gets the idea that it could possibly take part in a haircut," says Jürgen Kaiser, the coordinator of Jubilee Germany, a German NGO that promotes fair and transparent bankruptcy rules. Christine Lagarde lacks explanations "Situations may arise in which other lenders may ask, 'why are you not around when it comes to debt relief?'" he explains. In the end, there are no rules that say that IMF is given priority ahead of other creditors. Debt expert Kaiser finds the matter of distributing the debt burden after a haircut "quite intriguing." If Greece were granted debt relief and the IMF were asked if it would partake in it, then Lagarde would have problems explaining, says Kaiser. The IMF had problems explaining what happened in 2002 as well. At that time, more and more emerging and developing nations distanced themselves from the organization. Sustained growth rates allowed them to form foreign exchange reserves and enabled them to pay off their debts. The IMF lost its customers and was forced to look around for new business opportunities. New fields of opportunities inadvertently opened up in 2009 during the world economic crisis. At that time, IMF chief Dominique Strauss-Kahn took a chance. "The IMF gained influence during the world economic crisis," recounts Kaiser. The IMF now has access to approximately 300 billion dollars. "Even if crises erupt elsewhere, the IMF's involvement in Greece would not prevent the IMF from awarding emergency loans elsewhere," he says. "There is no competition for funds." What are sustainable debts? Kaiser thinks a haircut for Greece is still possible, even though the IMF will be involved in the third bailout package. "They have bought themselves a little bit of time. Until the next deadline," he reckons. The programs that Athens must now implement are based on the same "illusory figures that have been forced on the country the past five years." The IMF and the ESM, the European Stability Mechanism, came closer when the controversy over the definition of debt sustainability broke out this week. Now, the debt amount itself is not decisive, but the servicing of debt, instead. Europe's lenders claim to have given Athens the best conditions possible to service its debt to the IMF, argues the ESM. Langhammer considers the changed approach long overdue. "The sky may fall in on Greece, but Greece will continue to exist as a state. A country is an infinite investment object," he says and adds, "Economically, it is complete nonsense to think that a country will pay back its debts. It is more important that a country is able to meet its interest payment obligations on a regular basis."

Latin Americans and Asians are happy that they do not need the help of the International Monetary Fund (IMF). But, Europe can no longer function without it. What’s behind the IMF’s interest in Greece? With loans totaling approximately $25 billion, Greece is currently the International Monetary Fund’s (IMF) most important customer. “The IMF has crossed the ‘point of no return’,” ... Read More »

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