German prosecutors latch on to bonus payments to suspended VW manager

German regulators are probing why VW made bonus payments to an executive who was suspended following the diesel emission cheating scandal.

On Tuesday, in a development that continues to haunt Volkswagen, Europe’s biggest car producer,

German prosecutors have begun investigating the carmaker over a potential breach of fiduciary duty by VW over bonus payments made to an executive who was suspended following the cheating scandal.

According to VW, the the cheating was the handiwork of a handful of engineers who acted without the consent or knowledge of members of its management board.

In 2015, VW’s management board included its current chief executive Herbert Diess and chairman Hans-Dieter Poetsch.

According to prosecutors in Braunschweig, VW’s home region of Lower Saxony, they have begun investigating why one VW manager received bonus payments after being suspended from the company. German news daily, Bild am Sonntag, reported that the manager received $974,000 (866,000 euros) in bonuses between 2016 and 2018.

The prosecutors declined to identify the manager.

VW declined to comment on the payments.

Incidentally, the manager is among five VW executives, including former chief executive Martin Winterkorn, who is facing criminal charges for conspiring to cover up the carmaker’s diesel emissions cheating scandal.

According to regulators, VW had crossed the line from using legitimate software to protect engines from damage, known as Auxiliary Emission Control Devices (AECD); VW was using an illegal “defeat device”.

The definition of a defeat device as per the U.S. Environmental Protection Agency (EPA) is one which “reduced the effectiveness of the emission control system.”

The German carmaker stated, it stopped short of informing shareholders about the software before the announcement by the EPA since it was of the opinion that potential fines would not exceed 150 million euros.

The diesel emission cheating scandal has so far cost VW more than 29 billion euros.

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