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German prosecutors charged Volkswagen AG’s chair, chief executive officer and former CEO with allegedly withholding details from investors in connection with the automotive giant’s long-running diesel-emissions scandal.

Public prosecutors from Braunschweig, near Volkswagen’s headquarters in Wolfsburg, said in a 636-page indictment that they accused CEO Herbert Diess, chairman Hans Dieter Potsch and former CEO Martin Winterkorn of market manipulation in relation to the diesel-emissions controversy. The current and former executives, chief prosecutor Klaus Ziehe wrote, were “intentionally too late” earlier this decade in revealing to investors that they had discovered certain diesel vehicles were designed to circumvent U.S. emissions tests.

The scandal, which has been unfolding in public since details were revealed in September, 2015, by the U.S. Environmental Protection Agency, has cost Volkswagen at least €28-billion ($40.9-billion) in fines, vehicle buybacks and other penalties as the automaker has tried to rebuild its image with drivers and shareholders. But Tuesday’s news did not come as a huge shock to shareholders, who have gradually pushed Volkswagen stock back to its prescandal heights and only sent its common shares down 3.02 per cent to €154.30 apiece on Tuesday on the Frankfurt exchange.

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In an e-mailed statement, Volkswagen called the allegations “groundless,” and that it had fulfilled all reporting obligations. “The company has meticulously investigated this matter with the help of internal and external legal experts for almost four years,” wrote Hiltrud Dorothea Werner, who oversees integrity and legal affairs for Volkswagen’s management board. “… If there is a trial, we are confident that the allegations will prove to be unfounded. Furthermore, the presumption of innocence applies until proven otherwise.”

The company said that Mr. Diess would remain CEO, and that its supervisory board would gather on Wednesday for an “extraordinary meeting.”

Ferdinand Dudenhoffer, a professor of automotive economics at the University of Duisburg-Essen who has long been following the scandal, said that such an indictment was inevitable, as shareholders sought someone to take responsibility for not properly informing them that the company had cheated on emissions tests. “My point of view is that this will not deteriorate the image of VW, because everyone expected that it would happen,” he said in an interview.

But, he said, he expected former CEO Mr. Winterkorn and Volkswagen chairman Mr. Potsch – who was chief financial officer for the company when the emissions scandal quietly unfolded – to face significant scrutiny in court. Prof. Dudenhoffer said current CEO Mr. Diess was less likely to be held centrally responsible; he only joined the company in July, 2015, to lead its passenger-vehicle brand, less than three months before the scandal unfolded in public view.

On Sept. 18 of that year, the U.S. EPA contacted Volkswagen and its subsidiary Audi alleging that, from 2009 through 2015, they had installed devices in some diesel vehicles that could bypass control systems that comply with emissions standards. About 590,000 vehicles, the EPA wrote, violated the Clean Air Act. Mr. Winterkorn resigned as CEO days later.

In a statement to media on Tuesday, German prosecutor Mr. Ziehe said that the U.S. authorities’ multiyear investigation would have led to “increasing awareness” internally about the technology.

“It became increasingly clear that disclosing the [system bypass device] would entail significant financial risks,” Mr. Ziehe wrote. “… The accused was aware of the considerable financial consequences resulting from the explosive nature of the issue that it would have had to inform the capital market.”

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The EPA later contacted Volkswagen about other violations, eventually prompting a U.S. Department of Justice complaint, and, within a year, a multibillion-dollar settlement. In January, 2017, Volkswagen agreed to plead guilty to three counts of criminal felony, with multiple 10-figure financial penalties.

Mr. Winterkorn was also handed fraud charges in Braunschweig this past April, alongside four other managers, who were not named. He has also faced similar charges in the United States.

Bloomberg auto-sector analysts Michael Dean and Gillian Davis wrote in a research note that Tuesday’s charges would have a “temporary negative impact but may be difficult to prove for prosecutors,” and that they were “unlikely to derail an ambitious electrification strategy and recent earnings outperformance vs. peers.”

Also on Tuesday, fellow German automaker Daimler AG was fined €870-million by public prosecutors in Stuttgart in relation to the company’s own diesel-emissions investigation. ​

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