Continental fined 100 million euros for powertrain division issue
Olaf Schick, Executive Board member for Integrity and Law (Photo: Continental)
The public prosecutor’s office in Hannover, Germany today issued Continental AG a fine totalling 100 million euros. Proceedings relate to a “negligent breach of supervisory duties” within the company’s former powertrain division in connection with the supply of engine control units and engine control unit software (including for the VW EA189 1.6l). The fine consists of 5 million euros in penalties and a 95-million-euro levy of economic benefits.
The powertrain division was spun off to form Vitesco Technologies in 2021.
Following “intensive discussions” with the public prosecutor’s office in Hannover and a “detailed review,” Continental has accepted the decision and will not appeal. Continental states that “it is in the company’s interests that the fine proceedings have been brought to an end.”
Continental confirms its full cooperation with the public prosecutor’s office, including regularly sharing the results of its own investigation with the authorities. Furthermore, the company states that it has “significantly strengthened” its compliance measures, created an independent Executive Board function for Integrity and Law, and further expanded its technical compliance system. The public prosecutor’s office reportedly took these steps into account in Continental’s favour when calculating the fine.
Drawing a line
“It is important and in our own interests that we draw a line under the fine proceedings,” states Olaf Schick, Executive Board member for Integrity and Law. “We have made the topic of integrity our top priority, creating a new organisational structure and mandating intensive training for our employees. We are committed to this process and will continue to invest in the integrity of the company.”
Continental says the fine will not lead to any significant additional impact on earnings in fiscal 2024 thanks to a provision set aside for this purpose in previous years. As of 31 December 2023, a provision amounting to a high eight-figure sum had been set aside to cover risks of fines arising from the proceedings conducted by the public prosecutor’s office in Hannover.
On the basis of and in accordance with existing contractual provisions, Vitesco Technologies is in this respect generally obligated to indemnify Continental against the ensuing costs and liabilities. This follows the principle that all opportunities as well as risks from the transferred business passed to Vitesco Technologies as part of its spin-off.
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