Volkswagen and its former chief executive is being sued by the US Securities and Exchange Commission. The charges placed against the parties is that they had defrauded investors by making claims about the environmental impact of its cars that were false and “deceptive”.
A “massive fraud” while selling securities and a total of about half a million cars which Volkswagen had described to be clean diesel, had been committed by the German car maker between 2007 and 2015, said the US regulator. The regulator further alleged that when the company had made those claims, the extent of the cheating was known exactly and accurately by the executives of the company. The diesel cars in question reportedly emitted 40 times more of harmful nitrogen oxides than the legally permissible limit in the United States.
This move by the SEC is the latest impact of the diesel scandal that had rocked the company a couple of years ago. The company has already admitted in the US that it had used software to suppress emission readings in some of its diesel cars during regulator inspections. The scandal had created an aversion among politicians and regulators against diesel and had resulted in a global slowdown in demand for diesel vehicles.
As settlement of the criminal and civil actions brought against it in US and Germany, the company has already paid out billions of dollars in fines in those countries.
The most recent civil complaint filed in the US by the SEC on Thursday also has the name of Martin Winterkorn as an accused. He was the CEO of the company at the time of the diesel scandal and was forced to resign soon after the scandal came to light.
“Volkswagen issued more than $13bn in bonds and asset-backed securities in the US markets at a time when senior executives knew that more than 500,000 vehicles in the United States grossly exceeded legal vehicle emissions limits, exposing the company to massive financial and reputational harm,” the SEC said.
The SEC said that false statements to investors and the banks underwriting the securities were made by the company. This benefitted the company by hundreds of millions of dollars, the agency added.
The company misled investigators, “concocted a sham software fix” and destroyed evidence, the SEC said in its complaint.
“Issuers availing themselves of American capital markets must provide investors with accurate and complete information,” said Stephanie Avakian, a co-director of the SEC’s division of enforcement. “As we allege, Volkswagen hid its decade-long emissions scheme while it was selling billions of dollars of its bonds to investors at inflated prices.”
The action would be contested by it, VW said in a statement. The company described the action to by an unprecedented one and one that was and legally and factually flawed because there was no hard caused to any of the investors. .
“The SEC does not charge that any person involved in the bond issuance knew that Volkswagen diesel vehicles did not comply with US emissions rules when these securities were sold but simply repeats unproven claims about Volkswagen AG’s former CEO, who played no part in the sales,” VW said.
(Adapted from TheGuardian.com)