(MENAFN- Gulf Times) Volkswagen AG was dealt a setback in a €9bn ($10.2bn) investor lawsuit over the diesel emissions scandal when a judge said the court will allow shareholders to be reimbursed even if they can't prove top managers knew about the scam.
It will likely be enough to show that senior engineers, like the heads of engine development, knew about the software rigging, Presiding Judge Christian Jaede said in a preliminary assessment of the case at a hearing in Braunschweig yesterday. One of the most contested issues of the diesel saga has been how much VW's leadership knew about the widespread cheating.
'The engine of a car is like its heart, so anything key here can influence the business, said Jaede. 'When leaders of these units are representing that section, it's fair to say the company knew what they knew.
The comments are a boost for investors who claim VW should have released information about its use of a device that rigged emissions tests as early as 2007. The scam first became public on September 18, 2015, when US authorities disclosed their probe and VW issued formal notification to the markets four days later. Volkswagen has consistently said that the investors were properly informed about the diesel issue at all times. The company's lawyer, Markus Pfueller, criticised Jaede's comments.
'Apparently the plaintiffs can't prove that the company leadership knew about the issue, so the court is trying to help them at some other point, said Pfueller. 'No one in practice follows this view, nor does the financial regulator, Bafin.
The court's assessment is preliminary and may change before a final ruling. The comments don't effect other issues and investors still need to prove their case under the guidelines, Jaede added. The judge told plaintiff lawyers they still need to submit more details about what information was relevant for share prices and how it would have influenced the stock's performance.
Ever since the scandal broke, VW's main line of defence has been to blame a small group of engineers that it said colluded to rig the software and shielded their tricks from company leadership. As part of filings in the US and Germany, the car maker described the scam by top engineers, making it nearly impossible to deny the facts in court now.
Yesterday's comments aren't the first setbacks in the case for VW and its main shareholder, Porsche Automobil Holding SE, which is also being sued by its own investors over the disclosure issue.
Last year, the court slashed other defence lines in the case and said VW may be found liable for not making disclosures as early at July 2012. The judges also said they may allow shareholders who sold before the scandal broke to collect some damages.
Among the 11 engineers and second-tier managers the court yesterday said could be relevant to the suit were Heinz-Jakob Neusser, Richard Dorenkamp and Bernd Gottweis. They are among the people charged by the US for the rigging. German prosecutors are also probing them for fraud.
Andreas Tilp, lead plaintiff lawyer in the case, told reporters he was very happy with the proceedings. VW should contemplate settling as it could only become more expensive the longer the case continues.
The court may issue a partial ruling about questions regarding time limitations and its jurisdiction for some claims on May 27. Hearings in the case will likely continue on July 1.
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