Investors won a small victory in their battle to force Volkswagen AG to compensate them for share losses suffered in the wake of the German car maker's diesel emissions-cheating scandal.
When the Porsche-Piech family, heirs of Beetle inventor Ferdinand Porsche, and major shareholder Lower Saxony state, blocked minority shareholders from appointing an independent investigator to determine who was responsible for the scandal, the angry shareholders took their grievance to the courts.
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Now, a court in Celle in northern Germany, has ruled in favor of the minority shareholders, allowing them to have an independent auditor investigate the company and determine if senior executives knew about the cheating or whether they should have known and were therefore derelict in their duties.
"This is an extremely good day for the VW shareholders who have lost a lot of money in the wake of the diesel scandal," Klaus Nieding, an official with the DSW shareholder's rights group, said in a statement. "At last, light will be shed on the darkness that has shielded VW for so long."
VW called the court's ruling unfounded and said it was weighing its legal options.
The court's ruling is an important step, but it may not lead to any financial award for shareholders, who are seeking billions of euros in compensation for losses accrued when Volkswagen's shares plunged as much as 40% in days following the disclosure by U.S. authorities in 2015 that Volkswagen had rigged millions of diesel engines to dupe emissions tests. Authorities found that Volkswagen employees not only rigged the engines, but then carried out an intricate coverup to mislead regulators.
At the end of 2016, Volkswagen pleaded guilty to conspiracy to defraud the U.S. The scandal has cost the company around $25 billion so far in fines, penalties, legal fees and compensation for consumers.
Investors have so far seen no compensation for their share losses. The company's top management, including Chief Executive Matthias Müller and Chairman Hans Dieter Pötsch, are under investigation on suspicion of failing to inform shareholders in a timely fashion in the summer of 2015 about the impending U.S. investigation. Volkswagen has said it informed shareholders at the earliest possible moment in accordance with German securities law.
After the scandal came to light, Volkswagen hired the law firm Jones Day to conduct an internal investigation to determine exactly what happened and who was responsible for manipulating software on nearly 11 million vehicles with diesel engines across the company's main brands VW, Audi, Porsche and Skoda.
The Jones Day investigators grilled hundreds of senior managers and low level employees, compiling evidence that helped the Justice Dept. reach a $4.3 billion settlement with the company in 2016.
But the Jones Day findings were never made public. With the Celle court's ruling, investors now hope to either gain access to the Jones Day report or to conduct their own investigation in support of a separate lawsuit seeking more than $8 billion in damages from the company.
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(END) Dow Jones Newswires
November 08, 2017 14:48 ET (19:48 GMT)