Audi boss arrested in diesel probe

Audi chief executive Rupert Stadler was arrested Monday in connection with parent company Volkswagen's "dieselgate" emissions cheating scandal, with prosecutors saying they feared he might try to suppress evidence.

The dramatic development comes a week after Munich prosecutors raided Stadler's home after charging him with fraud and falsifying documents that allowed diesel vehicles equipped with cheating software to be sold to European customers.

Four police officers detained the Audi boss at his home at between 6 and 7 am, a spokesman for Munich prosecutors told AFP, saying that the arrest was justified as he is suspected of "seeking to influence witnesses or other suspects".

Stadler has denied the accusations and has said he is ready to be interrogated from Wednesday, added the spokesman.

Hours after the arrest, the VW group's management named Dutchman Bram Schot, who joined VW in 2011, to take over from Stadler as interim CEO.

Stadler is the most senior executive yet to be detained in the dieselgate crisis, which started when the Volkswagen group admitted in 2015 to installing so-called "defeat devices" in some 11 million diesels worldwide that made them seem less polluting in lab tests than they actually were on the road.

The affected vehicles involved VW's own-brand cars, but also those made by Audi, Porsche, Skoda and Seat.

VW's luxury subsidiary Audi has long faced suspicions that its engineers helped create the software used in the scam.

Audi's former head of engine development, Wolfgang Hatz, was taken into custody in Germany in September 2017 and remains behind bars.

A manager at Porsche was also detained in April. He was identified by German media as Joerg Kerner, an engineer in charge of Porsche's engine division who was working at Audi when the diesel scandal broke.

And German authorities earlier this month ordered the recall of some 60,000 Audi A6 and A7 cars across Europe to remove illegal emissions control software -- using a different technique however than the one at the heart of dieselgate.

- 'New start' -

"Audi needs a new start," said auto industry expert Ferdinand Dudenhoeffer of the CAR research centre.

Stadler, 55, who joined Audi in 1990 and has been its CEO since 2007, has enjoyed the full backing of VW's top brass so far.

But Dudenhoeffer said that may change, given the "very serious" allegations against him.

Stadler's arrest is the latest blow to the Volkswagen group, which has struggled to shake off the dieselgate crisis and continues to face a litany of investigations at home and abroad.

Two former VW chief executives -- Martin Winterkorn and his successor Matthias Mueller -- have both landed in the sights of German prosecutors.

They are suspected of knowing earlier than they have admitted about the cheating, meaning they may have failed in their duty to inform investors in the car giant about the financial risks.

US prosecutors also indicted Winterkorn last month, saying he knew of the company's emissions cheating as early as May 2014 but decided to continue.

Current boss Herbert Diess has also been accused of knowing about the scam before it became public -- an allegation rejected by the firm last month.

- Admitting 'responsibility' -

The diesel scandal has so far cost the VW group more than 25 billion euros ($29 billion) in buybacks, fines and compensation, mainly in the United States where the cheating scam was first uncovered.

But pressure has been mounting on the auto giant to make amends in Europe too.

Just last week, VW agreed to pay a one-billion-euro fine to settle a probe by German prosecutors.

In doing so, VW said it admitted its "responsibility for the diesel crisis".

Despite the controversy, the VW group last year reported global sales of 10.7 million vehicles -- a new record.

But the saga has cast a wider pall over Germany's vaunted car industry, with suspicions of emissions manipulation spreading to rivals BMW and Mercedes-owned Daimler.

To date, just two people have been convicted over "dieselgate", both in the US.

Former VW executive Oliver Schmidt is serving a seven-year sentence after pleading guilty to conspiracy to commit fraud and violating the US Clean Air Act.

VW engineer James Liang, who cooperated with investigators, was handed 40 months in jail last year.

Five things to know about VW's 'dieselgate' scandal
Frankfurt Am Main (AFP) June 18, 2018 - Volkswagen's emissions cheating scandal, for which Audi chief executive Rupert Stadler was arrested on Monday, has had repercussions for the car industry around the world.

Here's what you need to know about "dieselgate".

- How the scandal started -

On September 18, 2015, the US Environmental Protection Agency (EPA) reported that VW had installed illegal so-called defeat devices in hundreds of thousands of 2.0-litre engines in the United States since 2009.

The software -- used in the Volkswagen, Porsche, Audi, Seat and Skoda brands -- helped make the cars meet exhaust pollution standards when monitored in tests but in real life their emissions exceeded the limits.

Four days later the company admitted that some 11 million diesel vehicles worldwide, including 8.5 million in Europe, and 600,000 in the United States, had been fitted with the software.

Investigators found that some cars spewed out up to 40 times more harmful nitrogen oxide -- linked to respiratory and cardiovascular diseases -- than legally allowed.

As recently as May this year, Germany ordered Porsche to recall 60,000 vehicles across Europe after they were found to have been equipped with so-called "defeat devices". A month later, Audi was ordered to recall 60,000 cars for the same reason.

- How VW reacted -

VW chief executive Martin Winterkorn stepped down five days after the scandal broke in 2015, insisting however that he knew nothing of the scam.

He was replaced by Matthias Mueller, who himself is now being investigated. In April, Mueller was unexpectedly replaced as CEO by VW brand chief Herbert Diess.

VW's guilty plea to a US criminal case in March 2017 settled its legal entanglements there, adding $4.3 billion in criminal and civil fines to $17.5 billion it had already agreed to pay in compensation to owners and dealers and for environmental clean-up.

Volkswagen no longer faces legal action in the US, but eight former and current executives and an Audi official have been charged, including Winterkorn. Out of the nine two have already been handed prison terms.

Hoping to turn the page on dieselgate, VW has announced a renewed focus on electric vehicles, aiming to become the world leader in electric cars by 2025.

But it has offered no compensation to drivers in the European Union -- annoying the bloc's consumer protection authorities.

VW did however agree to pay a fine of one billion euros to settle a probe by German prosecutors earlier this month.

- Consequences for VW -

The scandal has so far cost VW more than 26 billion euros in fines, compensation and buybacks, mainly in the United States.

The company announced a net loss of nearly 1.6 billion euros in 2015, its first in 20 years, after setting aside billions to cover the costs of the dieselgate.

But it returned to the black in 2016, with a net profit of 5.1 billion euros, followed by 11.35 billion euros in 2017.

It still faces lawsuits from thousands of car buyers and investors around the world, including Germany, France, Italy, Britain and Poland.

- Have other carmakers been cheating? -

Tests carried out in the wake of the scandal found that diesel engines by other carmakers were also more polluting on the road than during testing. But none have so far admitted to mass cheating.

Rather the manufacturers in those cases said regulations allowed deactivation of emissions controls in certain conditions to protect the engine.

German luxury brand BMW and Mercedes-Benz maker Daimler have both had their offices raided by investigators searching for evidence of possible cheating.

France has also launched investigations into VW, Renault, Peugeot and Italy's Fiat.

- How have customers reacted? -

While VW sales have fallen in the United States, European drivers appear to have largely shrugged off the controversy.

The VW group is still the world's biggest carmaker, selling a record 10.74 million vehicles last year -- more than before the crisis erupted.

Diesel's market share however has fallen across Europe.

Related Links
Car Technology at SpaceMart.com

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