Audi CEO Arrested in Emissions-Cheating Investigation -- 6th Update
June 18 2018 - 09:54PM
Dow Jones News
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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