Volkswagen expresses frustration over pace of scandal inquiry

Wed May 18, 2016 8:25am EDT
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By Jan Schwartz and Maiya Keidan

HAMBURG/LONDON (Reuters) - Volkswagen (VOWG_p.DE: Quote) has expressed frustration about the slow pace of investigations into its emissions scandal, responding to demands from an activist shareholder for rapid reforms at the German carmaker.

In a letter seen by Reuters, Chief Financial Officer Frank Witter told British hedge fund TCI that Volkswagen (VW) had made significant progress in implementing a new structure for the group and the VW brand.

However, Witter also acknowledged that an inquiry by law firm Jones Day into who was responsible for rigging U.S. exhaust emissions tests was dragging on. "We are all frustrated at the time this is taking," he said.

VW commissioned the inquiry from the U.S. law firm last year, but Witter said Jones Day had to be allowed to continue its work into the second half of this year to ensure "no stone (is) unturned in the pursuit of truth".

The letter, dated May 17, was addressed to TCI founder Chris Hohn, who has said Europe's biggest carmaker needs to improve its performance and create a new governance structure.

Last month, VW announced a 4.1 billion euro ($4.6 billion) operating loss for 2015 after making huge provisions to cover the cost of clearing up the scandal.

It has reached a nearly $10 billion deal with the U.S. government, but still faces an array of civil law suits and members of its management board - which runs the company day-to-day - are under fire over their bonus scheme.

Asked about Witter's letter, TCI partner Ben Walker said VW had to reduce its labor costs and raise its profitability. Walker aimed his criticism at trade unions and the government of Lower Saxony state, which has a 20 percent stake in VW.   Continued...

A Volkswagen logo is pictured at Volkswagen's headquarters in Wolfsburg, Germany, April 22, 2016.     REUTERS/Hannibal Hanschke