Could face up to five years in prison.

The Dieselgate scandal is coming to a head as German prosecutors have launched a criminal investigation into two high-profile Volkswagen executives including ousted CEO Martin Winterkorn.

Little is known about the investigation at this point but prosecutors are focusing on Winterkorn and an unnamed member of Volkswagen's Board of Management.

Sources say the investigation centers around "sufficient, real signs" that the company failed to properly disclose the possible financial damage of the Dieselgate scandal.  The company acknowledged the presence of so-called defeat devices last September but it appears the company may have been in a position to warn investors prior to that date.

If convicted, Winterkorn and the Board Member could be forced to pay a fine or serve up to five years in prison.

Volkswagen downplayed the news by saying "today's press release from the Braunschweig public prosecution service does not cite any new facts or information on any serious breaches of duty by the members of the Board of Management now accused."  The company went on to say an independent investigation by U.S. law firm Jones Day hasn't found any "serious and manifest breaches of duty on the part of any serving or former members of the Board of Management."

Source: Automotive News and Volkswagen

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Statement by Volkswagen AG on the press release from the Braunschweig public prosecution service

 

The initiation by the Braunschweig public prosecution service on June 17, 2016 of investigation proceedings against two members of the former Board of Management only became known to Volkswagen AG immediately before today's publication of the corresponding press release.

 

Today's press release from the Braunschweig public prosecution service does not cite any new facts or information on any serious breaches of duty by the members of the Board of Management now accused.

Volkswagen AG's recommendation to the Annual General Meeting concerning formal approval of the actions of the Supervisory Board and Board of Management is based on information currently available from the comprehensive although not yet concluded investigation into the diesel matter by the independent investigator, U.S. law firm Jones Day. On this basis, law firm Gleiss Lutz carried out a comprehensive legal review, which has been confirmed by Professor Wulf Goette (retired chief justice at the German Federal Court of Justice). The Board of Management similarly obtained the advice of law firm CMS Hasche Sigle. In both of these legal reviews, according to information currently available, no serious and manifest breaches of duty on the part of any serving or former members of the Board of Management have been established that would stand in the way of granting formal approval at this time. This is the basis for the recommendation concerning formal approval.  

As has been planned for some time, the Supervisory Board and the Board of Management will once again obtain legal advice from the aforementioned law firms prior to the Annual General Meeting concerning whether there is any new information to be taken into account with regard to formal approval of the actions of the members of the Board of Management and Supervisory Board for fiscal year 2015.