20 May 2016 by Henry Ker
Norwegian fund to bring legal action against VW
The world's largest wealth fund, Norway’s Norges Bank Investment Management, is planning legal action against Volkswagen over last year’s emissions scandal to protect its financial interests.
The Norwegian sovereign wealth fund, which is worth £592 billion, is one of VW’s biggest investors – with a 1.64% stake in VW’s ordinary voting shares.
It is the biggest investor not to hold a seat on the company board.
According to the Financial Times, the lawsuit is imminent and will be filed in Germany.
It is joining other class-action cases being prepared in the country.
Petter Johnsen, Chief Investment Officer for equity strategies at Norges Bank Investment Management, said: ‘We have been advised by our lawyers that the company’s conduct gives rise to legal claims under German law. As an investor it is our responsibility to safeguard the fund’s holding in Volkswagen.’
It is the latest in a long line of legal action against the car manufacturer – it currently faces action from the US Department of Justice, the Federal Trade Commission and its own car dealers.
The company has already agreed to buy back or repair 500,000 vehicles in the US, as part of a first settlement that is estimated may cost VW up to $10 billion.
Volkswagen has announced that it is planning to change its remuneration policy for top executives after it admitted its policy ‘requires change’, following pressure from shareholders.
The investor TCI was the latest to call for change when it sent a letter to VW alleging that its excessive pay to management was a factor in the scandal.
There have been several other strong calls for the company to rectify its corporate governance following the emissions scandal.
This follows the widely-criticised decision to pay 12 current and former VW executives a total of €63.2 million for 2015 – the year that the company suffered its biggest ever loss.
The introduction of an annual charge to fund the Charity Commission is overwhelmingly opposed by charitable organisations, according to a survey of 610 charities by Navca.
Navca’s annual Voluntary Sector Survey showed only 9% were for the proposal, yet 77% of respondents were against.
As the Charity Commission has seen its budget fall by nearly half in the past few years, the proposal to charge organisations a fee to be regulation was mooted as a solution.
The Commission has indicated that it may be forced to introduce the measure soon.
The move has drawn public criticism, including from the Public Accounts Select Committee, which called it a ‘tax on charities’ and warned it would ‘block the creation of new charities’.
French President François Hollande has threatened to introduce legislation for a binding shareholder vote on remuneration, allowing investors to overturn excessive executive pay structures.
This would mirror the introduction of similar votes in UK and Swiss law.
‘If there is no drastic action [from companies], all decisions on pay by shareholders will be binding and the board of directors will not be able to undo them,’ Hollande told Europe 1 radio.
The move comes after a fall-out between shareholders and directors at car manufacturer Renault over the €7.3 million pay of the chief executive.
The government, which holds two seats on Renault’s board, labelled the governance of the company ‘dysfunctional’.