“The company and the persons responsible have fulfilled all their reporting obligations under capital markets law. Volkswagen AG will defend itself with all available legal means against these unjustified allegations. If there is a trial, we are confident that the allegations will prove to be unfounded,” Dr. Manfred Döss, Head of Legal Affairs at Volkswagen AG, said of the company’s legal position.
The Group Board of Management of Volkswagen AG had no specific reason at any time to believe that the company could face financial consequences that would require a disclosure to be made to the capital markets right up until the U.S. Environmental Protection Agency (EPA) published a “Notice of Violation” on 18 September 2015, which attracted extraordinary media attention. The information available to the company was regarded as being not material.
The subsequent financial consequences for Volkswagen AG were neither anticipated nor able to be foreseen by the Group Board of Management before 18 September 2015. The view of the Group Board of Management was supported by the external legal advisors appointed by Volkswagen AG at the time, namely the highly respected US law firm Kirkland & Ellis. At that time, specialized lawyers at the firm repeatedly reviewed these facts in relation to comparable cases involving other automobile manufacturers in the United States and informed Volkswagen AG of their assessments. These assessments and the conclusions that could be drawn from them concerning the financial consequences were well below the threshold that would be material for Volkswagen AG. As a result, the Group Board of Management concluded that the breach of compliance was not objectively material and therefore did not give rise to a requirement for an ad hoc disclosure.
In addition, until 18 September 2015, the Group Board of Management believed that discussions underway with the relevant representatives of the US authorities would lead to a negotiated resolution with financial consequences far below the materiality threshold for Volkswagen AG. This expectation was shown to be incorrect when the Group Board of Management became aware of the completely unexpected “Notice of Violation” on 18 September 2015.
The approach the US authorities took in issuing a “Notice of Violation”, and the specific intentions they pursued to impose sanctions on Volkswagen AG and subsequently do so, represented a paradigm shift that was not and could not have been foreseen by the Group Board of Management of Volkswagen AG or by its respected external US legal advisors.
Over the last four years, with the help of many external legal specialists, Volkswagen AG has carried out detailed investigations into the relevant events of 2015. These investigations did not identify any evidence that past or present members of the Group Board of Management of Volkswagen AG had information that would have caused them to believe that the facts were material and therefore would have led to a disclosure requirement before 18 September 2015.
“Volkswagen AG remains convinced that before the publication of the Notice of Violation there was no ad hoc obligation to inform the capital markets,” Dr. Döss added. Volkswagen AG will therefore defend itself vigorously against the allegations and is confident that legal proceedings will lead to the conclusion that the allegations are unfounded.
