
Martin Winterkorn, Out as CEO, Holds On to Key Posts at Volkswagen
NEW YORK (TheStreet) -- The restructuring of Volkswagen's (VLKAY) senior leadership remains far from clear in light of former CEO Martin Winterkorn's continuing roles at the German automaker.
Winterkorn, 68, who resigned last week in the wake of accusations the automaker had faked emissions tests on diesel-powered vehicles, remains chief executive of the Porsche SE family trust that controls 51% of VW shares. As such, he effectively controls a majority of VW's supervisory board (the German equivalent of the board of directors).
He also remains chairman of Audi, the luxury car unit, Scania trucks and the truck and bus holding company. The automaker hasn't disclosed whether Winterkorn will stay on in these roles. The chairmanship of Porsche SE is decided by Ferdinand Piech, VW's former chairman, and other members of the Porsche family.
Matthias Mueller, former head of Porsche, replaced Winterkorn as chief executive, leading to a series of other personnel moves.
"It shows that modern corporate governance doesn't play a role at Volkswagen," Ferdinand Dudenhoeffer, director of the Center for Automotive Research at the University of Duisburg-Essen, told Bloomberg.
As the employer of 600,000 and a champion of the German economy, VW may be subject to increasing government pressure to stabilize its prospects swiftly and transparently. Angela Merkel, the nation's chancellor, is becoming a figure who is expected to exercise leadership for all of Europe on a wider spectrum of economic issues than simply politics.
VW shares were off another 4% in Europe on Friday. Since Sept. when the U.S. Environmental Protection Agency announced charges against VW, the automaker's stock has dropped roughly 40%, triggering a negative outlook on its publicly traded debt securities by the Moody's ratings agency.
VW's ownership structure, with a family trust as majority shareholder, dates from the failed attempt of Porsche to acquire VW a decade ago, which resulted in the reverse -- VW absorbing Porsche.
Winterkorn's prospects this week were further cast in doubt when a German prosecutor first said the executive was the subject of a criminal investigation and then backtracked. The prosecutor's office in Braunschweig, a town near VW's headquarters city of Wolfsburg, announced that it was investigating Winterkorn but then it said that on the basis of a complaint it was only looking into whether there are grounds for a formal investigation.
A spokeswoman for the prosecutor apologized: "The prosecutors in Braunschweig regret any such impression and irritation that may have arisen from the press statement."
However, the prosecutor's office acknowledged that it will probe the emissions scandal to determine if there are grounds for charges against the company for fraud or any other crime.
V.W. in the U.S. has acknowledged that the U.S. Department of Justice is looking into the matter. Federal authorities settled criminal charges, which included large fines, against Toyota (TM) - Get Report in the wake of claims on unintended acceleration in its vehicles and later against General Motors (GM) - Get Report following a massive recall for defective ignition switches.
Doron Levin is the host of "In the Driver's Seat" on SiriusXM Insight 121, Saturday at noon and repeating on Sunday at 9 a.m.
The writer has no financial interest in the aforementioned companies.








