​Hesse, Baden-Württemberg and Greater Manchester funds sue VW

Volkswagen is being sued by two further German state pension funds, after the governments of Hesse and Baden-Württemberg joined Bavaria in filing suits in the wake of the car manufacturer’s emissions scandal.

The German state governments announced their lawsuits the same day as the UK’s Greater Manchester Pension Fund (GMPF) joined an 80-strong class action suit looking for €2bn in damages.

In separate statements from their respective finance ministries, the German states said they decided to file cases against VW at Braunschweig District Court to avoid missing the statute of limitations associated with 2015’s emissions scandal.

Hesse estimates its €2.4bn reserve fund for civil servants suffered losses of €3.9m after it was revealed VW had used so-called defeat devices to mask the true level of its cars emissions, while Baden-Württemberg estimates losses of €400,000.

The Hessian finance minister, Thomas Schäfer of the centre-right Christian democrats (CDU), said it was the government’s fiduciary duty to reclaim losses caused by “bad crisis management and lacking investor disclosure”.

Baden-Württemberg, which in total has €5.2bn in pension reserves covering civil servants and the state’s judiciary, cited similar concerns when explaining its suit, which it so far has only filed on behalf of the €3.2bn civil service reserve managed by Germany’s central bank, the Bundesbank.

In a statement, the state finance ministry said it expected a suit would filed on behalf of its €2bn reserve fund for the judiciary by its external asset managers.

Meanwhile, the UK’s largest local authority fund, the £17bn (€21bn) GMPF, joined a class action suit financed by Bentham Europe.

Covering 80 investors from 15 countries, including several European nations, the €2bn suit financed by Bentham covered investors holding nearly 20% of VW’s free float, according to Bentham CIO Jeremy Marshall.

Cllr Kieran Quinn, chair of the Greater Manchester Pension Fund, said of his fund’s decision to join the suit: “Playing our role in litigation is one way we can fulfil our fiduciary duty to maximise the fund’s returns, but we also hope there will be lessons learned from the VW scandal to raise corporate governance standards more generally.”

VW’s share price dropped from €162.40 to as low as €92.36 at the beginning of October last year in the wake of the emissions scandal.

It has since partially recovered and stood at €122.60 when German markets closed on 15 September.

A number of large investors have filed cases against the car manufacturer in the wake of the scandal, including the California State Teachers’ Retirement System and Norway’s sovereign fund, the Government Pension Fund Global.