## German public prosecutor opens investigation of Dr. Winterkorn in exhaust scandal

##### 28 September 2015

The Center for Economic Criminal Matters (Zentralstelle für Wirtschaftsstrafsachen) of the German public prosecutor in Braunschweig (Staatsanwaltschaft Braunschweig) has begun an investigation of Prof. Dr. Martin Winterkorn, the former CEO of Volkswagen AG, over the VW exhaust affair (“VW-Abgasaffäre”).

The focus of the investigation is the accusation of fraud related to the sale of vehicles with manipulated exhaust systems. Volkswagen AG had filed a criminal complaint with the prosecutor’s office without naming an accused.

The prosecutor’s office said the particular focus of the investigation of Dr. Winterkorn is the clarification of responsibilities (accountabilities).

Earlier in the day, citing “sources close to the matter”, Reuters reported that Volkswagen AG suspended Dr. Heinz-Jakob Neußer, head of brand development at its core VW brand; Dr. Ulrich Hackenberg, the head of research and development at Audi who also oversees technical development across the group; and Wolfgang Hatz, R&D chief at Porsche who heads group engine and transmissions development.

Volkswagen has not confirmed the suspensions.

Why is Porsche's R&D head suspended? As far as we know Porsche's cars are not having cheating software or do they? If they do the newly appointed CEO for VW is also problematic as he has been head of Porsche since 2009. We need some answers and we need them now.

Also the prosecutors should step the case up against VW from being a fraud case that only carries a maximum sentence of 10 years in jail to a case about global mass murder. We know 10s of thousands of people have been dying prematurely each year since 2008 because of the massive extra air pollution VW's dirty diesels have created. So this is global mass murder not just fraud. The implicated persons at VW need to be put away for life in order to serve justice to their numerous victims.

Why is Porsche's R&D head suspended? As far as we know Porsche's cars are not having cheating software or do they? If they do the newly appointed CEO for VW is also problematic as he has been head of Porsche since 2009. We need some answers and we need them now.

Also the prosecutors should step the case up against VW from being a fraud case that only carries a maximum sentence of 10 years in jail to a case about global mass murder. We know 10s of thousands of people have been dying prematurely each year since 2008 because of the massive extra air pollution VW's dirty diesels have created. So this is global mass murder not just fraud. The implicated persons at VW need to be put away for life in order to serve justice to their numerous victims.

Probably the most interesting answer that will result from the investigation is: what was the personal economic gain, in dollars, to the highest ranking individual who authorized the cheat?

Who would take these odds:

Putative "Upside":

$167 million in extra profit - vast majority of it paid to shareholders, not you ($167m would have been the cost of fitting the Adblue urea exhaust treatment system to 500,000 VW TDIs in the U.S. and meeting air quality standards without cheating)

Certain downside:

Imperil the public health (up to and including premature death)

Possible corporate downside:

$18 billion in fines The cost of a recall retrofit (estimated at ~$1 billion)
Tens of billions of shareholder equity wiped out (30% of VW market cap)
Unknown but very significant future losses from a badly tarnished reputation (lost sales, lost talent)
Much tougher enforcement of emissions standards worldwide
Billions in payouts to plaintiffs:
The air-breathing public
VW TDI owners
VW dealers
VW Suppliers (Bosch)
VW shareholders
Possible personal downside:
Professional loss of esteem and future income losses
Criminal prosecution (regardless of outcome)
Jail time
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Ethical failure aside, it's kind of stunning that anyone smart enough to make it into the executive ranks at VW took that bet, especially considerIng how many people must have known about the crime, and how easy the deception was to establish once people started looking carefully.

E.C.I

You are spot on. It has also blown my mind from the first moment I read about this scandal than anyone intelligent enough to get a top position at VW could also be such an idiot and make the call to start this cheating. As you point out so nicely the cost benefit analysis simply does not add up by a large margin.

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