Dear Mr. Chairman, dear members of the Board and shareholders,
My name is Erik Bomans and I’m here as representative of Deminor from Brussels, Belgium. Deminor advises a group of institutional and private shareholders of Volkswagen AG. Among our numerous clients are the pension funds of the City of New York, AP2 from Sweden and Hermes EOS from the U.K.
Last year we spoke here at the shareholders’ meeting and we complained about the lack of transparency regarding the ongoing investigations conducted by the law firm Jones Day.
Despite promises made by the company, Volkswagen has decided not to disclose the results of the Jones Day investigation. Certain elements of the investigation have become public, but as I said here last year, we’re not interested in bits and pieces filtered by Volkswagen’s management or by the company’s lawyers, we only want the full and complete truth.
While shareholders are scrambling to find out about the truth, the company has proceeded with various settlements in the U.S. and Canada. As of today, from the encrypted info disclosed by the Group, it appears that Volkswagen has committed or has been fined to pay a total amount of USD 28 bn. This amount is already exceeding the provisions booked by the company, and the total bill is likely to increase further.
The cost is entirely coming from the shareholders’ (including our clients’) pockets. Management is going out freely and has collected its bonuses or variable pay as if nothing has happened. Not one single senior manager or director of this company has been sued in relation to the Diesel emissions scandal.
While we as shareholders are footing the entire bill, when we ask for explanations we receive a flat refusal. By keeping the information for themselves, the Board and management are at least creating the impression that they are protecting their own interests. This does not help to restore investors’ confidence.
Shareholders are entitled to know what went wrong so that those responsible can be held accountable. Only shareholders can make that final call, the question cannot be left to the sole discretion of the Board and management. As we said last year, the company’s governing bodies lack the required independence and nothing has changed in this respect. In addition, only when the full truth is revealed can the necessary adequate reforms be proposed and implemented.
We would be grateful if the Board could answer the following questions:
- In January, 2017 it was announced that Volkswagen’s compliance officer Mrs. Hohmann-Dennhart received a EUR 10 million payoff after having worked just one year for the company. Did Mrs. Hohmann-Dennhart resign or did the company terminate the contract? Did the company have different views with Mrs. Hohmann-Dennhart about how to tackle the Diesel emissions crisis? Can you please confirm the exact amount and explain the contractual basis for the payment?
- Can you please explain why you decided not to make the Jones Day investigation report public?
- Do you believe the current amount of provisions (EUR 22.6 bn) in relation to the Diesel emissions issue is sufficient to cover all liabilities? What is the Board’s current estimate of total liabilities in connection with the Diesel emissions issue?
- Can you please confirm that the total amount of settlement agreements and penalties Volkswagen has been condemned to pay in connection with the “diesel issue” is USD 28 bn? If not, what is the precise number? Would it be possible for Volkswagen to have on its Group’s website a dedicated section to the “diesel issue” reporting: (a) all settlements closed, with specific indication of the amounts agreed, approved and paid; (b) all pending proceedings, with specific indication of the plaintiffs and amounts claimed; (c) all penalties Volkswagen has been order to pay?
- Did the company book any provisions for litigation outside of the US and Canada in connection with the Diesel emissions scandal? If so, what is the amount and what litigation is covered?
Written on May 10, 2017 by
Deminor helps businesses and investors monetise legal claims.