Volkswagen CEO Winterkorn steps down, takes responsibility for scandal

[webfact]

Volkswagen CEO steps down, takes responsibility for scandal
By GEIR MOULSON and PAN PYLAS

BERLIN (AP) — Volkswagen CEO Martin Winterkorn resigned Wednesday, days after admitting that the world's top-selling carmaker had rigged diesel emissions to pass U.S. tests during his tenure.

No replacement was announced, and VW still has no easy exit from a scandal that has suddenly dented a reputation for trustworthiness that took decades to build. The smog-test trickery has wiped out billions in VW's market value and raised the specter of criminal investigations and billions more in fines.

Winterkorn took responsibility for the "irregularities" found by U.S. inspectors in VW's diesel engines, but insisted he had personally done nothing wrong.

"I am doing this in the interests of the company even though I am not aware of any wrongdoing on my part," his statement said. "Volkswagen needs a fresh start ... I am clearing the way for this fresh start with my resignation."

Winterkorn, 68, resigned following a crisis meeting of the Volkswagen supervisory board's executive committee. Its acting chairman, Berthold Huber, said company directors are "resolved to embark with determination on a credible new beginning."

Huber said a successor will be discussed at a board meeting on Friday that was originally intended to approve extending Winterkorn's contract through 2018.

VW reversed its market slide, closing up 6.9 percent at 118.90 euros. But VW's share price has a long way to go to recoup this week's losses.

Nearly 25 billion euros (around $28 billion) was wiped out in the first two days of trading after the U.S. Environmental Protection Agency revealed that VW has been violating the Clean Air Act and could be subject to fines of as much as $18 billion.

Winterkorn, VW's boss since 2007, had come under intense pressure since the EPA's disclosure Friday that stealth software makes VW's 2009-2015 model cars powered by 2.0-liter diesel engines run cleaner during emissions tests than in actual driving.

The EPA accused VW of installing the so-called "defeat device" in 482,000 cars sold in the U.S. VW later acknowledged that similar software exists in 11 million diesel cars worldwide and was setting aside 6.5 billion euros to cover the costs of the scandal.

Huber said "Mr. Winterkorn had no knowledge of the manipulation of emission values," and praised the departing CEO's "readiness to take responsibility in this difficult situation for Volkswagen."

Stephan Weil, the governor of Lower Saxony state, which holds a 20 percent stake in Volkswagen, said VW is filing a criminal complaint, "because we have the impression that criminally relevant actions may have played a role here."

Weil, also a VW director, promised to "clear up these events with all the possibilities we have inside the company and ensure that those involved are punished severely."

The prosecutors' office in Braunschweig, near VW's Wolfsburg headquarters, confirmed that it is weighing an investigation of VW employees.

Other governments from Europe to South Korea have begun their own inquiries, and law firms have already filed class-action suits on behalf of customers.

There is no immediate way of restoring VW's reputation, but only total transparency can resolve the scandal and salvage its brand, said Jeremy Robinson-Leon, chief operating officer at Group Gordon, a New York-based corporate and crisis PR firm.

"The most important thing is that VW comes out and tells the public what happened, who was involved and make sure that it doesn't happen again," he said.

U.S. regulators raised questions about VW's diesel emissions in March 2014, and insisted on answers for another 18 months before the company finally acknowledged installing the stealth software.

The company has yet to reveal what its digital records show about who developed, wrote and tested the code, under whose direction, and why.

German authorities also insisted on answers Wednesday as they sought to limit the impact on Europe's largest economy.

Economy Minister Sigmar Gabriel said it's important the scandal is cleared up quickly and "the consequences are drawn." But he cautioned against casting doubt on the quality of Volkswagen as a whole or the rest of the country's auto industry.

"The damage that some people have unleashed for the company and its employees is huge — but I think we should take care not to make a general debate about the quality of Volkswagen or the whole German auto industry out of this," Gabriel said at the Frankfurt auto show.

"'Made in Germany' stands for excellent products," insisted Ulrich Grillo of the Federation of German Industries.

Still, economists are raising concerns about an impact on German growth.

Carsten Brzeski, chief economist at ING Germany, said the ongoing refugee crisis and now the "Volkswagen shocker" pose new risks. While the impact remains unclear, VW is "one of Germany's most important global champions" and an "important growth driver for the German economy."

Another unanswered question is whether Volkswagen was alone in trying to dupe emissions testers. Wah okorries about wider malpractices have depressed the share prices of many other European automakers, though not on VW's scale.

Some of those stocks recovered slightly from early session losses Wednesday. BMW's closed up 0.6 percent, while Daimler's was up 0.3 percent. French carmakers Peugeot Citroen and Renault fared worse though, down 2.6 percent and 2.3 percent respectively.

"Dealers despise being kept in the dark, and the carmakers as a whole will be a sector to swerve until there is a conclusion to this saga," said David Madden, a market analyst at IG.

Germany's biggest bank, Deutsche Bank, has already lowered its forecast for the main German stock market index, the DAX, where carmakers account for 25 percent of its total value. It warned clients to expect "a potentially more sustained loss in brand value and prolonged recovery period ahead in the U.S."
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Pylas contributed from London.


-- (c) Associated Press 2015-09-24

[kartman]

VW now looking for an ideal market to sell the technology

[peterb17]

I can't imagine he will lead a life of poverty.

In this world of litigation- there are already class actions being put together . The fine from America will be vast.

There is some speculation that this affair may bankrupt VW - so spare a thought for the 27,000 workers.

The whole thing was driven by the global warming nutters- less CO2 from diesel- but then the diesel fumes may have contributed to the death of thousands.

[lovelomsak]

I wonder how much he got paid when he quit. A few million dollars is usual for ceo's who mess up and have to quit.

[SantiSuk]

Bankruptcy may seem far-fetched, but...

In my former industry - accounting/consulting - the world's biggest firm at the turn of the century was either my old firm (PwC) or Arthur Andersen. They were good .. damn fine reputation. One small (internally feted) team responsible for the examination of the accounts and provide consulting services to a large US corporate energy company named Enron, decided to forget their heritage and make big money for themselves and their firm (to gain further internal adulation) by doing stuff the thoroughly odious Enron management wanted them to do - in direct conflict with their public responsibilities and law.

They got caught. The US regulators went for the jugular. Customers deserted in droves.

One small team. Within two years Andersen were no more - blown apart by the scandal. Employed 100,000 plus worldwide I think - most of whom regrouped and all of whom would have found jobs elsewhere, such was their known quality, but at notorious private pain. The name was not used again as a brand until fairly recently.

[Johpa]

Bankruptcy may seem far-fetched, but...

In my former industry - accounting/consulting - the world's biggest firm at the turn of the century was either my old firm (PwC) or Arthur Andersen. They were good .. damn fine reputation. One small (internally feted) team responsible for the examination of the accounts and provide consulting services to a large US corporate energy company named Enron, decided to forget their heritage and make big money for themselves and their firm (to gain further internal adulation) by doing stuff the thoroughly odious Enron management wanted them to do - in direct conflict with their public responsibilities and law.

They got caught. The US regulators went for the jugular. Customers deserted in droves.

Jugular my ass! Arthur Andersen simply changed their name and most of the "partners" went on to work in the same industry. The Wikipedia article give a decent overview that refutes the idea of going for the jugular, although those below "partners" probably lost their jobs. None went to jail for criminal acts. Just as none of the bankers involve criminally in the financial crisis were sent to jail, or even charged with criminal behavior by the eunuch Eric Holder. It is unlikely we will seen criminal charges and jail time for the VW ne'er-do-wells. Edited September 24, 2015 by Johpa

[uksomchai]

A while back we had in the UK the great horse meat scandal. tesco bore the brunt of the outcry. I said at the time that if they had only had a CEO or top ranking manager who had some balls they could have made this into a plus. All they had to do was relabel the affected stock as " Mixed Meat ", reduce the price enough and instead of throwing away millions of pounds of burgers etc they would have won the PR battle. As it happened they just capitulated and have never recovered to this day.

VW now is faced with the very same dilemma. What they need to do is take the fight to the Global warming / Climate change Nazi's who have been fiddling the figures for decades now and play them at their own game. The same goes for the spineless and gutless politicians that caved in to these people rather than back the car manufacturers. They opted to promote diesel cars that gave off less CO2 but more particulates all in the name of meeting pathetic and irrelevant limits on CO2 that will never be met

Unfortunately VW will go the way of Tesco and simply hand over huge fines which will do nothing to make any difference at all to anyone. The only winners here will be the lawyers as usual