The Volkswagen crisis is going to have some legs, both for the company and for its recently departed CEO, Martin Winterkorn. The ex-chief is under investigation for alleged fraud by prosecutors in Germany, according to Reuters. Meanwhile, two German newspapers report that engineers and a supplier appear to have complained two years ago about the so-called “defeat device” used to fool emissions tests.
There’s already been a wave of resignations and restructuring, but the sheer size of the scandal—11 million vehicles, $18 billion in potential fines in the US alone, and a 34% plunge in the stock price—along with hints that the trouble had been previously called out by employees and suppliers suggests that there may be more fallout to come. (It doesn’t help that the company repeatedly and vehemently denied the problem until regulators threatened to withhold approval of its 2016 model cars.)
Reuters quotes German prosecutors as saying that Winterkorn is being investigated for “allegations of fraud in the sale of cars with manipulated emissions data.” Quartz has reached out to Volkswagen for a comment and will update this post as warranted. When Winterkorn resigned on Sept. 23, a board member stressed that the outgoing chief had “no knowledge of the manipulation of emissions level,” a claim Winterkorn has repeated. That will be put to the test by this investigation.
Regardless of whether Winterkorn had specific knowledge of the scandal, it seems reasonable to suspect that the culture he created (pdf), with its intense pressure to boost sales, may have contributed to it.
His management strategies worked to an extent, resulting in Volkswagen this year surpassing Toyota as the world’s largest automaker, and in Winterkorn being paid more like a top US CEO than the typical European executive. (He earned $18.5 million a year.) Volkswagen’s run atop the global rankings could very well end here, though, and the shortcuts it took to get there has cost Winterkorn his job.