VW investors file $2.2bn lawsuit in German court

Investment manager Blackrock, the world's largest, on Friday joined around 160 other shareholders to claim compensation from German carmaker Volkswagen over its massive diesel emissions scandal.

VW investors file $2.2bn lawsuit in German court
File photo: DPA
A spokesman for the state court in Brunswick, not far from VW's Wolfsburg headquarters, confirmed that the lawsuit had been filed early on Friday afternoon.
The spokesman was unable to provide details about the amount claimed by plaintiffs, but weekly news magazine Der Spiegel reported that the investors were seeking more than 2 billion euros ($2.2 billion) in damages.
Blackrock targeted “Volkswagen's failure to disclose to investors the use of 'defeat devices' that manipulated emission tests” in a statement on Thursday announcing the legal action.
VW admitted in September 2015 that it had built software into 11 million diesel vehicles that detected when they were undergoing regulatory emissions tests and temporarily lowered the amount of harmful nitrogen oxides in the exhaust.
As well as suffering a heavy blow to its reputation, Volkswagen has had to set aside billions for potential damages and fines, with the bill for the crisis mounting to almost $15 billion in the US alone.
Its share price has also been hammered on markets, plunging 40 percent in the days after the revelations on September 18.    
“Volkswagen continues to believe that we comprehensively fulfilled our obligations under capital markets law and that the claims are unjustified,” a spokesman for the carmaker told AFP on Friday in response to the complaint.
The latest lawsuit adds to a growing stack of legal challenges related to the 'dieselgate' scandal weighing down VW, including another case at the Brunswick state court launched by almost 400 investors claiming around 4 billion euros.
On Friday, the German state of Hesse announced that it would launch a compensation claim of its own, becoming the second of the country's 16 regions after Bavaria to do so.
German news agency DPA reported that the southwestern state of Baden-Wuerttemberg will soon file a separate case to avoid falling foul of a one-year legal deadline.

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Five things to know about Germany’s ‘dieselgate’ scandal

The emissions cheating scandal, which on Tuesday saw three Volkswagen chiefs charged and its rival Daimler heavily fined, has had major repercussions for the car industry since it broke four years ago.

Five things to know about Germany's 'dieselgate' scandal

Exposed in 2015

On September 18th, 2015, the US Environmental Protection Agency (EPA) reported that VW had installed illegal “defeat devices” in hundreds of thousands of engines in the United States since 2009.

The software — used in the Volkswagen, Porsche, Audi, Seat and Skoda brands — helped the cars meet exhaust pollution standards when monitored in tests even though their emissions actually exceeded the limits.

It meant that some cars spewed out up to 40 times more harmful nitrogen oxide — linked to respiratory and cardiovascular diseases — than legally allowed.

The company later admitted that 11 million diesel vehicles worldwide, including 8.5 million in Europe and 600,000 in the United States, had been fitted with the software, most of them in the VW brand.

SEE ALSO: 'Dieselgate': German prosecutors charge former Audi boss with fraud

Legal fall-out

VW chief executive Martin Winterkorn, who stepped down five days after the scandal broke, was in April 2019 charged with serious fraud, unfair competition and breach of trust.

Eight former and current executives and an Audi official have been charged in the United States, including Winterkorn.

Audi chief executive Rupert Stadler was charged in July 2019 with fraud, falsifying certifications and illegal advertising in connection with the “defeat devices”.

Former Audi head Rupert Stadler at a press briefing in 2018.

VW's guilty plea to a US criminal case in March 2017 settled its legal entanglements there, bringing to around $22 billion the amount it agreed to pay in fines and compensation to owners and dealers and for environmental clean-up.

The group still faces investigations and lawsuits around the world, in Europe the countries include Britain, France, Germany, Italy and Poland.

Costs for VW

The scandal has so far cost VW around 30 billion in fines, compensation and buybacks, mainly in the United States.

The company announced a net loss of nearly €1.6 billion in 2015, its first in 20 years, after setting aside billions to cover the costs of the dieselgate.

In June 2018 it agreed to pay a 1 billion fine in Germany, admitting its responsibility for the diesel crisis.

Audi agreed in October 2018 to pay an 800 million fine and Porsche was in May 2019 ordered to pay a fine of 535 million.

Other carmakers?

Tests in the wake of the scandal found that diesel engines by other carmakers were also more polluting on the road than during testing.

But none have so far admitted to mass cheating.

However Mercedes-Benz maker Daimler was in June 2018 ordered to recall 774,000 diesel vehicles across Europe because they too were fitted with illegal “defeat devices”.

Fiat Chrysler agreed in January 2019 to a pay $515 million to settle claims it installed the software.

And in February 2019 German prosecutors fined high-end carmaker BMW 8.5 million euros over diesel cars with higher harmful emissions than allowed, though they found no criminal wrong-doing.

Opel is also being investigated.

A worker holds up a Volkswagen badge at the VW plant in Wolfsburg. Image: DPA

Market reaction

A study released in March 2017 said that pollution from 2.6 million rigged VW cars sold in Germany would likely cause 1,200 premature deaths in Europe because of the excess emissions.

In Germany more than 410,000 customers are demanding compensation, as are

More generally, European drivers appear to have largely shrugged off the controversy while VW sales have fallen in the United States.

VW said in July 2019 it expects “slightly higher” unit sales for the year than in 2018.

SEE ALSO: VW sees steady profits in 2018 results