Germany's top court rejects VW's bid to suspend emissions audit

FRANKFURT (Reuters) - Germany's highest court has rejected a bid by Volkswagen AG VOWG_p.DE to suspend the work of a special auditor appointed to investigate management's actions in the "Dieselgate" emissions scandal.

FILE PHOTO: A U.S. flag flutters in the wind above a Volkswagen dealership in Carlsbad, California, U.S. on May 2, 2016. REUTERS/Mike Blake/File Photo

A three-judge panel did not give an opinion on the merits of the case, in which VW argues that the naming of the auditor by a lower court violated its fundamental rights, but did dismiss the firm’s request for an injunction.

“The constitutional complaint that has been filed is neither a priori inadmissible nor is it obviously ungrounded,” the Constitutional Court panel said in the five-page ruling, dated Dec. 20, that was seen by Reuters.

It added, however, that VW had not “convincingly made the case for an immediate decision”.

A regional court appointed the auditor in November, in a victory for shareholder groups that want to establish whether VW bosses withheld market-moving information about the manipulation of vehicle-emissions tests.

The court in the town of Celle ruled that VW could not appeal against its decision. The auto maker views the appointment of the auditor as a violation of its fundamental rights, a company spokesman said on Friday.

VW admitted in September 2015 to installing secret software in hundreds of thousands of U.S. diesel cars to cheat exhaust emissions tests and make them appear cleaner than they were on the road, and that as many as 11 million vehicles could have similar software installed worldwide.

Shortly after the Dieselgate scandal broke, VW hired U.S. law firm Jones Day and advisory firm Deloitte to investigate the circumstances of its wrongdoing and who was responsible.

Although VW had pledged to improve transparency, it never published the findings that were used as the basis for a $4.3 billion settlement with the U.S. Justice Department.

Investor groups seeking billions in damages from VW are trying to establish when VW’s executive management board first became aware of cheating in the emissions tests and whether it disclosed possible financial damage to investors promptly.

German securities law requires companies to publish any market sensitive news in a timely fashion. The matter is also being investigated by German prosecutors.

VW has said it believes its management complied with obligations under German disclosure rules. The spokesman referred to the Jones Day investigation, as well as a statement of facts published by the U.S. authorities in which VW admitted manipulating the emissions tests.

Reporting by Hans Seidenstuecker; Writing by Douglas Busvine; Editing by Adrian Croft