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Business

Ex-VW CEO Winterkorn investigated for market manipulation

German prosecutors have launched an investigation into former VW CEO Martin Winterkorn and brand chief Herbert Diess. They stand accused of withholding information about the Dieselgate scandal from shareholders.

Prosecutors in the German city of Braunschweig said Monday that they had opened a formal investigation into possible market manipulation by former Volkswagen chief executive Martin Winterkorn as well as a second senior executive, left unidentified.

Sources told the dpa news agency that the second individual is brand chief Herbert Diess, who is also on VW's management board.

The prosecutors will look into whether the executives failed to inform shareholders soon enough about the German carmaker's Dieselgate scandal, set off last September when VW diesel vehicles were caught cheating emissions tests in the US. Shareholders were told about the scandal the same day that VW admitted its wrongdoings to the public, on September 22, 2015.

Winterkorn resigned that same month. He and a number of other former VW employees have meanwhile already come under investigation by Braunschweig prosecutors on charges of fraud.

Caught by surprise?

Following the announcement of the probe on Monday, VW released a statement reiterating that ongoing and independent investigations, including by the US-based law firm Jones Day, have yet to reveal any such breaches of duty by the executives under question.

VW still plans to relieve the board and oversight committee of guilt during its annual shareholders meeting on Wednesday.

The new investigation was brought forward by Germany's financial regulator BaFin, which is tasked with ensuring that publically traded companies inform the financial world in a timely manner about important topics through ad-hoc reports.

BaFin receives criminal complaints filed by individuals and organizations. It then decides whether there is enough evidence behind the complaint for a formal investigation.

In its annual report published this May, VW maintained that it had not foreseen the financial damage the scandal would cause when it realized that the "defeat devices" installed in its diesel vehicles could break US environmental law.

The carmaker cited in the report similar cases that were resolved with less acrimony.

uhe/jtm (dpa, AP, Reuters)