US officials have been forced to defend the pace of investigation into Volkswagen's 'dieselgate' after being put on the spot by a judge.
According to a Reuters report, US district judge Charles Breyer had in May questioned the Securities and Exchange Commission (SEC) "lateness" suing VW over two years after the automaker settled the US justice department criminal probe, pleading guilty to three felonies and paying US$4.3bn.
"My basic question is what took you so long," Breyer said, adding he was "totally mystified" as to why the SEC waited until 2019.
Reuters added that, on Monday (9 July), the SEC disclosed details of its probe in court filings and said it had held extensive settlement talks with the automaker before deciding to file suit.
The SEC said it received about 2m pages of VW records and delayed immediately issuing formal subpoenas after the automaker agreed to produce materials voluntarily. The financial regulator had filed a civil suit last March accusing VW and former chief executive, Martin Winterkorn, of defrauding investors in US bond offerings.
In its court filing, the SEC said that its "staff worked hard and as quickly as possible under very difficult circumstances to complete an investigation into numerous different securities offerings conducted by a foreign company and three of its affiliates over many years," and "treated VW fairly and afforded the company full process throughout its investigation."
According to Reuters, the agency added its challenges "included long delays by VW in producing documents and other information," and "uncooperative witnesses who were reluctant or altogether refused to speak to the staff".
VW on Monday in a statement said it had "cooperated fully with the SEC's investigation, and today's filing confirms that the SEC is now piling on".
The company settled with the justice department in January 2017 over the issue of asset-backed securities and "obtained a broad release, including from fraud and misrepresentation claims", it added.
VW noted the filing said SEC staff did not begin to investigate VW bond sales until 2017 "even though private bondholders had sued Volkswagen over those bonds in June 2016. Volkswagen has never missed an interest or principal payment for any of its bonds, which always remained investment grade."
Reuters said Jeffrey Shank, an SEC lawyer who supervised the probe, in a court filing said SEC offices in New York and Chicago opened inquiries in September 2015 but the agency was unaware of the existence of the VW bonds until 2017 and that it then took 10 months for VW to disclose who was responsible for statements made to VW bond investors.
The SEC said former Volkswagen of America CEO Michael Horn refused to be interviewed by the SEC even after it told his lawyers in September 2017 the justice department would be willing to offer Horn safe passage.
The SEC also was unable to interview Winterkorn.
Shank said the SEC held settlement talks over several months and gave VW and Winterkorn's lawyers an opportunity to argue why the SEC should not file suit, Reuters reported.
The news agency noted regulators and investors have argued VW should have informed them sooner about the scope of the scandal while the automaker said it was not clear it would face billions of dollars in fines and penalties.
VW issued more than $13bn in bonds and asset-backed securities in the US markets at a time when senior executives knew that over 500,000 US diesel vehicles grossly exceeded legal vehicle emissions limits, the SEC complaint said.
Volkswagen reaped hundreds of millions of dollars "by issuing the securities at more attractive rates for the company," the SEC said, according to Reuters.
Catch up with VW's long-running emissions crisis here