Business

Germany launches probe into ex-VW CEO Winterkorn

The corporate world today is much like the high seas, when the ship founders, the captain goes goes down with the ship whether it was his fault or not. This is apparently the case with Martin Winterkorn, the former CEO of German car maker Volkswagen, as German authorities announced on Monday they were launching an investigation involving possible fraud relating to Winterkorn’s knowledge of and role in the ongoing diesel emissions scandal.

Volkswagen CEO Martin Winterkorn

More on investigation into ex-VW CEO Winterkorn

Volkswagen, which has admitted to cheating diesel emissions tests in the United States, is under huge pressure to get to grips with the biggest business scandal in its 78-year history.

The iconic German car maker named Porsche head Matthias Mueller as the new CEO late last week, and also announced it had asked a well-known U.S. law firm to undertake a complete investigation of the diesels emissions scandal.

According to Reuters sources with knowledge of the matter, Volkswagen has suspended the heads of research and development at its VW, Audi and Porsche brands.

German media reported over the weekend that Volkswagen staff and one of the company’s suppliers had complained about the use of “defeat devices” to detect when a car was being tested and change the operating mode of the diesel engine so it would emit far less toxic nitrogen oxides than it did in normal operating mode.

Emissions fixing an industry-wide problem?

European environmental organization Transport & Environment published new data this week demonstrating that some new Mercedes, BMW and Peugeot cars use up to 50% more fuel than laboratory tests show, pointing to this as proof of a wider industry problem.

T&E, which is partnered with the European Commission, however, noted that its data did not prove other firms were using defeat devices like VW.

The environmental organization went on to say, however, that the gap between lab results and road performance had grown so much for emissions of both carbon dioxide and nitrogen oxides that an investigation was required to find out how how car manufacturers were hiding emissions.

“The Volkswagen scandal was just the tip of the iceberg,” commented Greg Archer, clean vehicles manager at T&E, continuing to point out the gap between lab tests and real-world performance cost an average driver 450 euros ($504) every year.

Of note, ACEA, the European Automobile Manufacturers’ Association, released a statement last week noting there is no evidence that the use of defeat devices has become an industry-wide issue.