Norges Bank Investment Management is seeking to join a class action suit against Volswagen in Germany for the car company’s emissions scandal.
Lawyers advised the $850 billion wealth fund, which has stakes in over 9,000 companies, to sue the company because the car maker’s conduct “gives rise to legal claims under German law.”
Volkswagen admitted to cheating U.S. emissions tests via a secret software they installed in their diesel engines, which switched on emission controls only during pollution tests.
The investment company is one of Volkswagen’s largest investors and is one of the latest to file a suit due to the scandal. Other legal actions come from the U.S. Department of Justice, the Federal Trade Commission and its own dealers. The fund, according to Bloomberg’s data, has a 1.64 percent stake in Volkswagen.
The suit is expected in the next few weeks according to the Financial Times and will be filed in Germany to compound on the other class-action cases being prepared in the country.
According to the fund’s spokeswoman, MartheSkarr in an email, “Norges Bank Investment Management intends to join a legal action against Volkwagen arising out of [the fact that] the company provided incorrect emissions data.”
“As an investor, it is our responsibility to safeguard the funds holding in Volkswagen,” she added. “It’s the board’s responsibility to ensure accurate and timely information is disclosed to the shareholders…Volkswagen informed the public about incorrect emissions data after U.S. authorities released a notice of violation letter.”
The car company already set aside 16.2 billion euros ($18.3 billion) to pay costs of the emissions scandal. It also slashed the dividends it will give its shareholders by 97 percent.
Last month VW and U.S. authorities agreed to the car manufacturer’s proposition to buy back nearly half a million vehicles and fund greener car technologies.
The wealth fund is keeping to its strategy of being “much more ethically and environmentally conscious,” according to Warwick Business School’s Christian Stadler, a professor of strategic management who said that the case is a follow through of the strategy.
At the same time, the company is also allowing more minority shareholders to have a bigger voice in German corporate governance.
“It has disputes with Volkswagen for many years over its governance, as the Porsche family are effectively able to do what they want; as the largest shareholder, they really only have to consider the State of Lower Saxony, which has a 20 percent holding, and is where the company is headquartered,” Prof. Stadler said.
“In Germany, minority shareholders don’t have much of a voice, which is something the fund has campaigned against before, as 4 percent of its equity is in Germany,” he added.
“It will not divest in Volkswagen, but wants to work toward changing its corporate governance structure.”
Volkwagen has yet to comment on the fund’s move. The car company maintains that it acted on the information they had available at the time and had only been aware of the crisis when the U.S. authorities issued a notice of violation last year.