Volkswagen's CEO and chairman charged in Germany over diesel emissions scandal

London(CNN Business) Volkswagen CEO Herbert Diess and the company's chairman, Hans Dieter Pötsch, were charged by German prosecutors on Tuesday with stock market manipulation tied to the carmaker's diesel emissions scandal.

The two executives are accused of failing to disclose the huge financial risks of the diesel scandal to shareholders in a timely fashion.

New charges against Martin Winterkorn, the former CEO of Volkswagen (VLKAF), were also revealed in an indictment running to nearly 640 pages.

Under German law, top executives must inform shareholders of information that can affect stock prices — such as considerable financial risks — as soon as they become aware of them.

In a statement, prosecutors accused all three men of failing to carry out their duty to investors.

The indictments are the latest fallout from Volkswagen's bombshell admission in 2015 that it had rigged millions of diesel cars worldwide to cheat on emissions tests, a scandal that has cost the company over $30 billion.

Shareholders were also hit hard: The company's stock price plummeted by nearly 40% after allegations of cheating were finally made public in September 2015.

Volkswagen said in a statement that the allegations are unfounded.

"The company has meticulously investigated this matter with the help of internal and external legal experts for almost four years," said Hiltrud Dorothea Werner, a senior executive responsible for legal affairs. "The result is clear: the allegations are groundless."

The company's supervisory board said it would hold an extraordinary meeting on Wednesday, and expressed its support for Diess and Pötsch.

The carmaker, a lynchpin of the German economy that employs roughly 650,000 workers, has sought for years to turn the page on the scandal. But investigations on both sides of the Atlantic have resulted in indictments against top executives, undermining claims by the company that senior managers were not aware of emissions cheating until late 2015.

Winterkorn, who stepped down as CEO after the scandal was revealed, was already facing charges in Germany and the United States.

US prosecutors alleged last year that he was informed of diesel emissions cheating as early as May 2014. He was charged with fraud, and accused of agreeing with other executives to continue the practice.

The timeline

German prosecutors said Tuesday that questions from American authorities about engine manipulation that began in 2014 and intensified in 2015 should have made the financial risks clear to Volkswagen executives.

Winterkorn, prosecutors said, had full knowledge of the situation by May 2015 at the latest. Pötsch and Diess were aware by June 29, 2015 and July 27, 2015, respectively.

Despite this, they failed to disclose the "explosive nature" of the issue to financial markets until September 18, 2015, in order to support the Volkswagen share price, prosecutors said.

The new charges are likely to increase pressure on Diess, who joined the world's largest carmaker as head of its Volkswagen brand only months before the diesel scandal burst into view.

Diess was made CEO of the group, which includes Audi, Porsche and Skoda, in 2018. He has sought to move beyond the diesel scandal with an aggressive and expensive push into electric cars.

Earlier this year, Diess apologized for making a controversial reference to a notorious Nazi slogan while talking about the company's profits.