German authorities arrest Audi CEO over dieselgate

AUDI AG CEO Rupert Stadler has been arrested without charge in Ingolstadt, Germany, for his role in the ongoing dieselgate saga, with Munich-based public prosecutors expressing their fears that he might tamper with evidence by influencing witnesses.

 

This arrest makes Mr Stadler the highest-profile senior executive from Audi AG parent company Volkswagen AG to be put behind bars for their involvement in the prolific diesel emissions cheating scandal, which broke cover in September 2015.

 

As a result, it is expected that Volkswagen AG’s supervisory board will this week suspend Mr Stadler and name Audi AG board member for marketing and sales Bram Schot as his interim replacement.

 

In a statement published by AP News, Audi AG explained that shortly after Mr Stadler’s arrest, the judge ordered he remain in custody pending possible charges at the public prosecutor’s request.

 

Investigators will question Mr Stadler over the next week, according to the public prosecutors, but he could remain in jail for up to three months as part of his possible pre-trial detention.

 

Mr Stadler’s arrest comes after German authorities searched his private residence last week with suspicion of fraud and falsifying public documents regarding the sale of diesel vehicles in Europe.

 

It is alleged that Mr Stadler was aware of the software-based defeat devices fitted to certain Volkswagen AG products, such as the aforementioned Audi AG vehicles, as early as 2015, but continued to allow their European sale nonetheless.

 

Audi AG announced in May this year that it had found “engine management irregularities” in about 60,000 examples of its fourth-generation A6 and first-generation A7 models sold in Europe with the Gen2 evo 3.0-litre turbo-diesel V6. This same powertrain saw Porsche’s Cayenne also implicated.

 

The current German investigation involves about 20 people linked to Audi AG, while Volkswagen AG still faces dieselgate-related legal proceedings in 55 countries, including Australia, according to Bloomberg.

 

Mr Stalder has held the role of Audi AG CEO since 2007 and also counts Volkswagen AG board of management member among his responsibilities.

 

However, Mr Stadler is not the first Audi AG executive to be jailed over the saga, with former Volkswagen AG powertrain development head Wolfgang Hatz remanded in custody in Munich since September last year.

 

While former Volkswagen AG CEO Martin Winterkorn faces a similar fate after being formally charged with fraud by the United States department of justice, he is yet to face trial thanks to the protection from extradition under the German constitution.

 

As previously reported, Volkswagen AG was last week handed a €1 billion ($A1.56 billion) fine from the Braunschweig-based public prosecutor for its involvement in the scandal.

 

According to Reuters, Volkswagen AG’s newest fine falls outside of the €25.8 billion ($A40.23 billion) provision it has set aside for the financial consequences of dieselgate. As such, the penalty will impact its earnings.

 

Volkswagen AG was given a larger $US4.3 billion ($A5.68 billion) fine in January last year when the US department of justice hit it with criminal and civil penalties alongside Mr Winterkorn’s charge.

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