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Delayed cheating admission 'legitimate,' VW says

Volkswagen's delay in announcing it had cheated US diesel emission tests was a legitimate move aimed at striking a deal with regulators, company lawyers have said as they are contesting damage claims by shareholders.

Europe's biggest automaker admitted to US regulators on Sept. 3 it had used illegal software to disguise levels of toxic emissions, but it was not until Sept. 18 that the matter became public.

The delay has led several shareholders to lodge lawsuits at the German regional court in Braunschweig, claiming Volkswagen was too slow to inform them of its cheating.

According to the company's official written response to the lawsuit revealed on Monday, VW's lawyers said the delay was to allow for talks aimed at reaching a settlement with US regulators, and that the talks could have been jeopardized if the matter was already public.

"The Volkswagen management board had a reason to assume that a consensual solution would be possible with the authorities, that would not have led to significant economic consequences for VW," law firm Göhmann said in the 113-page report submitted to the court already on Feb. 29.

The VW lawyers also said that the "temporary non-disclosure" did not serve the purpose of "covering up the breach of compliance," and that the attempt to reduce the cost of the scandal was "not only legitimate but almost advisable."

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Shareholders seek compensation

VW's admission in September that banned software could be fitted in up to 11 million vehicles worldwide wiped billions off its market value, forced out long-time CEO Martin Winterkorn and sparked investigations and lawsuits across the world.

The law firm's report is an initial statement of defense against accusations that VW deliberately withheld market-sensitive information from investors. Claimants say the carmaker knew about the irregularities long before the scandal broke and should have informed shareholders much earlier because they must have known it would affect the share price.

But according to the defense document, VW insists that the German shareholder lawsuits are "without merit" and that until "the violation of US environmental regulations was announced" on September 18, "there were no indications whatsoever of information with relevance for the stock price."

US authorities had never unilaterally decided to go public with similar accusations against other carmakers, VW argued. On the contrary, even when allegations of potential violations of the US Clean Air Act had been made, normally an appropriate solution was found with the US authorities behind closed doors, it said.

"In the past, even in the case of so-called 'defeat device' infringements, a settlement was reached with other carmakers involving a manageable fine without the breach being made public," VW argued. "And in this case, the employees of Volkswagen of America had the impression on the basis of constructive talks with the EPA that the diesel issue would not be made public unilaterally but that negotiations would continue," the document stated.

Volkswagen is still trying to reach an agreement with US regulators on how to fix affected vehicles in that country and has been sued by the US justice department for up to $48 billion (43.5 billion euros) for allegedly violating environmental laws. VW is planning to publish results of a probe into the scandal by US law firm Jones Day in the second half of April.

uhe/pad (Reuters, AFP, dpa)

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