Volkswagen’s Porsche Bosses under Investigation

It was more or less a smooth travel for the German global auto giant who until now was reputedly the clear hero of ‘clean diesel’ cars.

Smooth at least when compared to its other big players in the world’s auto market- Toyota and General Motors who were deeply trapped in the emission scandals that rocked the industry over the last three or five years.

In 2016, the car maker was finally pulled into the emission fiasco with Two Porsche executives are under investigation over their role in Volkswagen's emissions scandal.

Volkswagen was accused of installing emissions software on more than a half-million diesel cars in the U.S.—and approximately 10.5 million more around the world.

According to the research report which was disclosed by the EPA and the California Air Resources Board, the software allowed Volkswagen cars to sense the unique parameters of an emissions drive cycle set by the Environmental Protection Agency. 

The agency claimed that in the test mode, the cars were fully compliant with all federal emissions levels. But when driving normally, the computer would switch to a separate mode—significantly changing the fuel pressure, injection timing, exhaust-gas recirculation, and, in models with AdBlue, the amount of urea fluid sprayed into the exhaust.

Volkswagen, with an estimated market share of 70 percent of the U.S. passenger-car diesel market, took a significant hit from the scandal: the least of which was a drop in its share prices during the period as a result of reduced investors’ confidence in the company.

Now just when it appeared to have waived of the issue and at least managed to reassert its presence as the undisputed leader of the diesel cars market, the German owned automaker is back on the headlines. This time over the involvements of its top management members in the emission fiasco.  

In a report from a year old investigation on the issue, German prosecutors have alleged that the company’s current and former boss, Matthias Mueller and Hans Dieter Poetsch, may have delayed releasing information to investors.

Mr. Mueller, the boss of Porsche, and Mr. Poetsch, the former boss and now chief executive of VW, are due to be scrutinized by prosecutors in Stuttgart.

The main contention being, whether the executives knew about the emissions scandal unfolding in the United States, but withheld the information from the stock market.

One of the primary duty of a company’s executive is to update investors on price sensitive developments, or risk accusations of market manipulation.

However, some industry experts argue that it is often not best practice for executives to go ahead in disclosing some operational details, especially the technical ones, not until such have been duly confirmed a potential threat to price or integrity of the product.