VW claws back €270m from insurers over Dieselgate

Volkswagen will receive €270m from its insurers for the damage the company suffered from the actions or inaction of senior executives during the diesel-emissions scandal, in the first such payout since the existence of cheat devices was uncovered in 2015.

A review of liability claims carried out by law firm Gleiss Lutz, on behalf of VW’s supervisory board, reported in March that former chief executive Martin Winterkorn, as well as former boss of group brand Audi, Rupert Stadler, had breached their “duties of care” to the corporation, along with four other managers.

In particular, it accused Winterkorn of knowing of the existence of the cheat devices from July 27 2015, months before the scandal was uncovered in September, and of failing “to comprehensively and promptly clarify the circumstances behind the use of unlawful software functions”.

Winterkorn, VW added, “also failed to ensure that the questions asked by the US authorities in this context were answered truthfully, completely and without delay”.

The board concluded that from September 21 2016, Stadler failed to ensure that engines developed by Audi were “investigated with regard to unlawful software functions.”

On those dates, both former employees were given specific warning signs, but failed to act, the report said.

Winterkorn and Stadler deny any wrongdoing. Separately, Stadler is standing trial on fraud charges in Munich, while Winterkorn is due to stand trial at a court close to VW’s headquarters in September.

VW said it had agreed a €270m settlement with its panel of directors and officers insurers. D&O cover is a core type of commercial insurance that protects businesses against losses linked to certain acts by their leaders or senior managers, such as a breach of trust or misleading statements.

D&O insurance prices have been rising globally in recent years as growing litigation costs drive up the cost of new policies.

VW had to wait until the Gleiss Lutz report, the largest of its kind in German corporate history, was delivered before it could finalise its negotiations with the D&O insurers.

The €270m in compensation pales by comparison with the costs of Dieselgate, for which VW has been forced to pay out more than €32bn in fines, legal fees and customer compensation.

Alongside the D&O deal, the supervisory board reached an agreement to accept a payout of €11.2m from Winterkorn, which would settle VW’s claims against him as an individual. The board also approved a similar deal with Stadler, for €4.1m, and agreed to accept smaller amounts from two other former managers.

All of the settlements will have to be approved at VW’s annual general meeting next month.