The Gulf Time Newspaper One of the finest business newspapers in the UAE brought to you by our professional writers and editors.
Bloomberg
Volkswagen AG’s bill for cheating on diesel emissions could potentially top $35 billion as a legal battle with thousands of investors heats up in the German carmaker’s own backyard.
A court in the town of Braunschweig, just over 20 miles from VW’s Wolfsburg headquarters, has scheduled a series of hearings starting on September 10 in a case combining claims by some 4,000 shareholders demanding 9 billion euros in compensation.
They argue VW failed to warn them soon enough about an investigation by US regulators, who triggered a collapse in the stock after they announced their diesel probe three years ago.
Enraged shareholders filed the first cases in October 2015. A year later, a wave of institutional investors followed, among them BlackRock Inc., the California Public Employees’ Retirement System and
Allianz Global Investors. The proceedings were moved to the Braunschweig civic center to make space for the hordes of lawyers as well as investors who want to attend.
Volkswagen admitted in late 2015 that it rigged diesel vehicles to cheat emissions tests in the US and that about 11 million worldwide could be affected.
VW has calculated the scandal’s overall financial impact at 27.4 billion euros. That includes payouts to US customers, states and regulators and a 1 billion-euro settlement with German prosecutors.
Should the investors score a complete victory, that toll would grow by a third.
While a full award is unlikely and the company hasn’t made any provisions for the risks, VW has added 3.4 billion euros to contingent liabilities in its financial statements for that litigation — potentially bringing the overall cost above 30 billion euros.
“There’s clearly a risk that VW may have to pay something in the end, and I would scale it at about 50 percent,†said Juergen Pieper, a Frankfurt-based analyst at Bankhaus Metzler who recommends buying the stock.