By William Boston 

BERLIN -- The chief executive of Volkswagen AG's luxury unit Audi was jailed Monday without bail after prosecutors said they were worried he might try to interfere in a probe into whether he was involved in the German car maker's diesel-emissions cheating scandal.

The arrest of the executive, Rupert Stadler, came a week after Munich prosecutors searched his home and said they had added him to a list of about 20 suspects in a broad fraud investigation stemming from the scandal.

Volkswagen admitted in 2015 to rigging nearly 11 million diesel-powered vehicles, including Audi models, with software that allowed them to cheat on emissions tests. The following year, the luxury Audi unit was part of a broader settlement, in which Volkswagen pleaded guilty to defrauding the U.S. government.

Volkswagen has incurred about $25 billion in penalties, fines and compensation for customers stemming from the admission.

The scandal has also claimed a growing roster of Volkswagen executives. The U.S. has indicted eight, including former Chief Executive Martin Winterkorn, on charges of conspiracy to defraud the U.S. and to commit wire fraud, and to violate the Clean Air Act. Two are serving time in federal prison.

Mr. Winterkorn, who has denied knowledge of the cheating, and the others remain in Germany, which has a law prohibiting the government from extraditing its citizens.

Meanwhile, various German investigations into the cheating have been progressing more slowly. Mr. Stadler, a longtime executive at Volkswagen and Audi, is the third person to be arrested by German authorities so far in connection with the scandal. He has served as Audi's CEO since 2010.

A Munich prosecutor said Mr. Stadler, 55 years old, was arrested at his home early Monday. The prosecutor, state's attorney Stephan Necknig, said investigators found evidence during the June 11 raid of Mr. Stadler's home that suggested he might try to tamper with witnesses and other suspects in the case. "There was evidence that people and other suspects would be influenced. That's why we immediately issued an arrest warrant," Mr. Necknig said. He didn't provide further details.

Mr. Stadler hasn't been charged with any wrongdoing. In Germany, it is common practice for prominent individuals suspected of a crime to be named by prosecutors in public. Being named a suspect doesn't mean the person will ultimately be charged.

Mr. Stadler's attorney didn't respond to a request for comment.

A Volkswagen spokesman declined to comment, citing the continuing probe. Audi declined to comment on the allegations, saying only that "the presumption of innocence also applies to Mr. Stadler."

Last week, the Munich prosecutor's office said it added Mr. Stadler as a suspect to a probe into fraud and illegal advertising in connection with the sale of over 200,000 Audi vehicles in the U.S. and Europe that included software that allowed the vehicles to cheat on emissions tests. Mr. Stadler hasn't commented. Audi declined to comment at the time, except to say it was cooperating in the probe.

Munich prosecutors arrested Mr. Stadler just hours before Volkswagen's supervisory board was due to meet and hear a presentation from its lawyers about the investigation into Audi executives and employees, according to people familiar with the matter. The board is dominated by core shareholders -- the heirs of Volkswagen Beetle inventor Ferdinand Porsche and the state of Lower Saxony -- and the IG Metall trade union, which holds half of the 20 seats.

Mr. Stadler has close ties to the Porsche family, which holds a majority of Volkswagen's voting stock. He has come under pressure to step down from investors and analysts who say that he hasn't been aggressive enough in resolving Audi's involvement in the scandal.

Last July, Munich prosecutors ordered the arrest of Zaccheo Giovanni Pamio, the former head of thermodynamics at Audi's engine-development division. He has been released on bail, and it is unclear whether he was charged with any offense.

Mr. Pamio has been indicted in the U.S. on charges of conspiring to defraud the U.S., wire fraud and violating the federal Clean Air Act. The U.S. is seeking his extradition. Mr. Pamio's attorney couldn't immediately be reached for comment.

In September, New York prosecutors charged Wolfgang Hatz, Volkswagen's former engine chief, with fraud and illegal advertising resulting from the sale of Audi diesel vehicles. He has been held in custody pending trial. Mr. Hatz's attorney declined to comment.

The manipulation of diesel engines affected 2-liter engines that were made by Volkswagen and used in some Audi vehicles, such as some compact A3 models. Larger 3-liter diesel engines built by Audi and used in sport-utility vehicles produced by Audi, VW and Porsche, Volkswagen's sports-car brand, were also manipulated.

--Ulrike Dauer and Markus Klausen contributed to this article.

Write to William Boston at william.boston@wsj.com

 

(END) Dow Jones Newswires

June 18, 2018 21:39 ET (01:39 GMT)

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