German probe into alleged VW market manipulation could wrap up this year

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BRAUNSCHWEIG, Germany (Reuters) – German prosecutors could wrap up an investigation into alleged market manipulation by senior Volkswagen executives this year, the prosecutors said on Thursday, after ordering the carmaker to pay 1 billion euros to settle claims of emissions cheating.

FILE PHOTO: Volkswagen sign is seen during the annual earnings news conference of VW in Berlin in Berlin, Germany, March 13, 2018. REUTERS/Hannibal Hanschke/File Photo

On Wednesday, Braunschweig prosecutors fined Volkswagen (VOWG_p.DE) for management lapses in failing to prevent cheating of diesel emissions tests, one of the biggest ever penalties imposed by German authorities against a company.

The 1 billion euros is not included in the 25.8 billion euros ($30 billion) that Europe’s biggest carmaker has so far set aside to cover costs related to its 2015 admission that it cheated U.S. diesel emissions tests, and so it will hit earnings, analysts at Evercore ISI said.

German prosecutors are also investigating whether senior Volkswagen executives including chairman Hans Dieter Poetsch and chief executive Herbert Diess informed investors in a timely fashion about the size of potential fines faced by the carmaker for cheating U.S. emissions tests.

The company denies any wrongdoing by its executives.

“On market manipulation, it is possible that there will be a decision this year. A decision does not necessarily mean bringing charges, it could mean closing the proceedings,” Braunschweig prosecutor Klaus Ziehe said at a news conference.

In a filing submitted to a Braunschweig court on Feb. 28, Volkswagen argued it did not violate ad hoc disclosure rules because it did not understand the scope of potential fines and claims faced by the company.

Four days before U.S. regulators blew the whistle on Volkswagen, Poetsch – the company’s chief financial officer at the time – saw the potential financial risk from emissions violations at 150 million euros, the court filing shows.

U.S. authorities disclosed Volkswagen’s systematic emissions cheating on Sept. 18, 2015, sparking the biggest business scandal in the company’s history and triggering a crackdown on emissions across the industry.

Reporting by Andreas Cremer; Writing by Edward Taylor; Editing by Maria Sheahan and Mark Potter

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