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As of 13:23 22 May 2019
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As of 13:23 22 May 2019

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Volkswagen: has it cleaned up?

Today Programme

BBC Radio 4

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Volkswagen has its annual meeting later today. The company committed to clean up its act over its diesel scandal where it cheated emission tests for more than a decade. Hans-Christophe Hirt, Head of Hermes Equity Ownership Services tells the Today Programme it hasn't really done so.

"It's almost four years on now and we haven't had enough transparency. who knew what and when is still a question," he says.

The supervisory board of non executives is stocked with the same personnel as well, he says, making change unlikely.

The company is controlled by two families and a German state - Lower Saxony - which means outside pressure doesn't mean much, he says.

But independent shareholders should still bring pressure to bear today, he says.

Porsche fine over emissions scandal


Porsche has been fined €535m (£460m) over the diesel emissions scandal by the Stuttgart Public Prosecutor's Office.

The fine consists of a €4m penalty for a negligent breach of duty by Porsche and €531m levy for economic benefits.

The prosecutors said that the company's development department had neglected its legal obligations and that allowed the sale of diesel cars which breached emissions rules.

Parent company Volkswagen will take the financial impact of the fine into its second quarter figures.

"Porsche has never developed and produced diesel engines. Concluding the proceedings is another important step towards ending the diesel topic. In the fall of 2018, Porsche announced its complete withdrawal from diesel and is fully focused on the development of cutting-edge gasoline engines, high-performance hybrid powertrains and electric mobility," Porsche said.

VW legal bill

VW car
Getty Images

The bill for possible legal issues is weighing on German car maker Volkswagen.

It has just published first quarter results in which it set aside €1bn (£860m).

Pre-tax profits fell to €4.1bn from €4.5bn.

Chief Financial Officer Frank Witter said: "The Volkswagen Group is once again off to a good start this year. The sales revenue performance and earnings growth in the first three months of the current fiscal year are encouraging. But we have to continue to pick up the pace when it comes to our transformation.”

What's in today's papers?

Today's papers

Another mixed bag of stories appear on the front of today's finance sections.

The Guardian reports on the German charges for Martin Winterkorn under the heading "Former VW boss charged with fraud over Dieselgate emissions test scandal".

The Times reports some good news: research from EY suggests that "Britain takes top spot for global firms seeking deals".

The FT leads on "Goldman dashes shake-up hopes" while its Companies & Markets section is topped by "Barclays activist extends financing".

A 'serious problem' for VW's reputation

Professor Christian Stadler, of Warwick Business School, has commented on those German charges for ex-VW chief over the VW emissions fraud. He said:

This is another distraction and more negative publicity that Volkswagen could do without as the economic slowdown and the move towards electric vehicles creates a more challenging climate for car manufacturers. The launch of yet more legal action keeps the scandal fresh in people's minds and fuels suspicion that there might be rotten things going on at the company. That is a serious problem for VW's reputation.

'A particularly serious case of fraud'

Martin Winkerkorn
Martin Winkerkorn

What are the charges faced by the VW executives?

Five people have been charged with fraud relating to the emissions scandal, including the former chief executive Martin Winterkorn.

They "are accused of multiple crimes realised in a single criminal action, especially a particularly serious case of fraud and an infraction of the law against unfair competition".

The full charge sheet is here (you'll need to be able to read German!).

Emissions scandal background

VW cars
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Former VW chief Martin Winterkorn is also being sued in the US.

Here's a reminder of the background to that emissions scandal.

Volkswagen had to recall hundreds of thousands of cars around the world after it admitted in September 2015 to installing illegal software in diesel engines to cheat strict US anti-pollution tests.

As a result the US sued VW, accusing the German carmaker of "massive fraud" over the scandal.

The Securities and Exchange Commission claimed VW misled investors by issuing billions of dollars worth of bonds and securities, without disclosing that it had cheated emissions tests.