Trial of former VW boss begins over 'dieselgate' scandal

The former boss of Volkswagen has appeared in court charged with fraud, market manipulation and perjury, nine years after the carmaker was found to have rigged emissions tests.

Martin Winterkorn was chief executive of the German company in 2015 when it was engulfed in a scandal that sent shockwaves through the entire industry.

It emerged the company had been deliberately manipulating official emissions checks, building cars that could pass laboratory tests while producing illegal levels of pollution in daily use.

Tuesday marked the start of the Mr Winterkorn's trial. He denies the charges.

"Our client did not defraud or harm anyone, he did not deliberately leave the capital market in the dark so that investors would be harmed, and he told the investigating committee the truth," his lawyers said.

The so-called "dieselgate" affair erupted in September 2015, when the US Environmental Protection Agency accused Volkswagen of installing illegal software on diesel cars.

It developed into one of the biggest corporate scandals Germany had ever seen, and sparked off a political drive towards electric vehicles which has had a profound effect on the industry around the world.

The former chief executive stands accused of deliberately duping Volkswagen’s customers and shareholders, as well as German politicians. If found guilty, the 77-year-old could face up to 10 years in prison.

The affair had its origins in a drive by the carmaker to increase sales in North America, particularly of diesel cars - which it marketed as "clean diesels".

The reality, however, was that those cars were not clean. The company had been struggling to get its engines to meet stringent US emissions standards while maintaining high performance and reliability.

The solution its engineers came up with was to develop so-called "defeat devices". These were software that recognised when a car was being tested in the laboratory, and turned on emissions controls so that it could pass the tests.

When the car was out on the road, it would turn them off again in order to boost performance.

It subsequently emerged that the scam had been operating since 2006, and that more than nine million vehicles in Europe and North America had been fitted with the software.

Brands throughout the Volkswagen corporate empire were affected, including Audi, Porsche, Seat and Skoda as well as Volkswagen itself.

Volkswagen had to pay hefty fines, issue recalls and compensate consumers. The affair cost it more than €30bn (£25.2bn).

Mr Winterkorn, who had been chief executive since 2007, stepped down within days of the scandal coming to light. Indicted in 2019, he was meant to stand trial in 2021 alongside other executives, but the proceedings were delayed due to concerns about his health.

Two of the charges against him have been brought by prosecutors in Braunschweig, close to Volkswagen's headquarters in the Lower Saxony town of Wolfsburg.

They have accused him of fraud, because buyers were "deceived about the characteristics" of the cars they were buying and faced collective losses of hundreds of millions of euros as a result of the scandal.

He has also been accused of market manipulation, after allegedly failing to inform investors about the emissions-rigging software once he became aware of it.

A further indictment comes from the Berlin prosecutor’s office. It has accused Mr Winterkorn of giving false testimony to a parliamentary committee that was investigating the scandal in 2017.

Volkswagen chairman Hans Dieter Poetsch and the former head of the brand, Herbert Diess were both charged with market manipulation. But those charges were dropped after the company agreed to pay a fine of €9m

The former Audi chief executive, Rupert Stadler received a fine of €1.1m and a 21-month suspended jail sentence, after admitting to fraud by negligence over his role in the affair.

All were indicted in Germany. By contrast, former engineer Oliver Schmidt went on trial in the US. He was sentenced to seven years in jail in 2017, but was released in 2021.

Mr Winterkorn has already paid €11m to his former company as part of a settlement in relation to the scandal.