Volkswagen will offer generous compensation packages for the roughly 600,000 US owners of diesel vehicles that emit an illegal amount of emissions, the head of its claims fund told a German paper.
The German car maker has still not decided whether vehicle owners will be offered cash, car buy-backs, repairs or replacement cars, Kenneth Feinberg told Frankfurter Allgemeine Sonntagszeitung.
Volkswagen in December asked Feinberg — who earlier headed the compensation funds for the September 11, 2001 attacks, the BP Deepwater Horizon oil spill and General Motors’ ignition switch crashes — to create and administer the programme.
On Friday Volkswagen postponed the publication of financial results for 2015 and delayed its annual shareholders’ meeting as it struggles to put an exact price on its diesel emissions scandal.
More than four months after the scandal broke in the US, Europe’s leading carmaker has still not won approval to fix any of the vehicles. Last week it named a new head of its US legal department to help resolve the case.
Feinberg’s original plan of setting up the claims fund within 60 to 90 days is facing possible delays, he told the paper.
“My hands are tied as long as VW and the authorities have not overcome their differences,” Feinberg said.
However, an overwhelming majority will likely accept the eventual compensation offer, Feinberg told the paper.
“Look at my prior cases: 97% of the victims of September 11 accepted my offer. At GM and BP it was more than 90%, too. That has to be my target for VW,” Feinberg said, adding that the car maker had granted him full authority to decide on the compensation.
“It is a purely business transaction, less emotional. I see that from e-mails I get from vehicle owners, who say things like: ‘Mr Feinberg, I know I haven’t lost a relative, I just want to be treated fairly.’ They are all quite reasonable,” he said.
Feinberg added that he has not yet decided on whether to consider claims that the emissions damaged the health of claimants.
“I am inclined to not accept that and tell such people they should sue Volkswagen if they want to,” he said.
Uncertainty about the financial impact of VW’s biggest-ever corporate scandal on its accounts has increased since the start of the year, sending its shares 26% lower.
“VW is an important company for Germany, Europe and the world. That’s why we will keep our stake as long as the fund and the company exist,” the fund’s CEO Yngve Slyngstad said.
US regulators last month rejected VW’s original plan to fix 2.0 litre diesel cars equipped with software capable of violating emissions rules, raising concerns that VW may have to carry out a larger number of costly vehicle buy-backs in the world’s second-biggest auto market.
In Europe, VW is facing demands from the European Commission and lawmakers to consider compensating VW drivers in a way comparable with a scheme in the US where the carmaker has promised goodwill packages worth $1,000 each to tens of thousands of owners of VW vehicles.
The Wolfsburg-based group already set aside €6.7bn ($7.5bn) in the third quarter of 2015 to cover repair costs for vehicles worldwide. Pieper said those provisions could need to be topped up again by another €2-3bn.
Norway’s sovereign wealth fund hits out at VW leadership
The head of Norway’s sovereign wealth fund — one of the biggest capital pools in the world — yesterday lashed Volkswagen’s ownership structure as giving too much power to family shareholders and disadvantaging minority shareholders, reports AFP.
As VW battles a global emissions-cheating scandal, the fund’s chief executive, Yngve Slyngstad, slammed the carmaker’s shareholder structure.
“This cannot be a role model for Germany,” Slyngstad told the newspaper, Frankfurter Allgemeine Sonntagszeitung.
The Porsche and Piech families own 50.73% of VW’s voting shares via the holding company Porsche Automobil Holding, but they own only 31.5% of the company equity.
“I don’t think that anyone genuinely believes that the family wants to change anything about the structure,” Slyngstad told the newspaper.
“We as co-owners don’t get the impression that the family wants to listen to us.”
Norway’s €734bn ($819bn) fund holds a stake of 1.2% in Volkswagen.
It previously criticised the German group’s shareholder structure in 2009 following the VW-Porsche takeover battle.
The star lawyer VW has hired to handle compensation claims in the US told another newspaper yesterday that it might take some time yet before a deal is hammered out for owners of the affected vehicles in the US.
“My hands are tied as long as VW and the authorities don’t overcome their differences. The original timeframe could be delayed,” lawyer Kenneth Feinberg told Die Welt am Sonntag.
Feinberg is renowned as the go-to lawyer for high-profile legal cases.
He managed the compensation claims fund for General Motors related to the deadly ignition switches used in some of its cars.
Feinberg also managed similar funds for the victims of the September 11, 2001, terror attacks and the massive oil spill in the Gulf of Mexico in 2010.
Feinberg, who originally suggested when he was hired in December that it could take between 60 and 90 days to draw up a claims resolution programme, said all options were still on the table with regard to what form the compensation could take.
“It has not yet been decided. All options are still up for debate: cash payments, car buy-backs, repairs, or the provision of replacement cars,” he said.
“It’s immaterial to me what a company can afford. What is important for me is to find a solution that is generous enough to satisfy the affected customers,” Feinberg said.
“My task is not to punish VW,” he added.
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