Houston Chronicle

Scandal over diesel emissions deepens

German authoritie­s target a top executive at Audi in fraud case

- By Jack Ewing

FRANKFURT, Germany — Germany’s car industry, already under scrutiny for concealing excess diesel pollution, suffered fresh damage to its reputation Monday after prosecutor­s said a top Volkswagen manager was a suspect in a criminal inquiry and authoritie­s in Berlin ordered Daimler to recall hundreds of thousands of vehicles equipped with illegal emissions cheating software.

Volkswagen, where the emissions cheating first emerged more than 2½ years ago, was punished for hesitating to overhaul its management ranks when Munich prosecutor­s said they had opened a fraud investigat­ion into Rupert Stadler, leader of the automaker’s highly profitable Audi division and a member of the Volkswagen management board.

Stadler, 55, whose home was raided by investigat­ors Monday, is the first active member of Volkswagen’s upper echelon to be identified as a suspect in the inquiry, which has broadened over time to include dozens of current and former managers and engineers.

Later in the day, the German Transport Ministry ordered Daimler to recall 774,000 vehicles in Europe because of “inadmissib­le” software that shut down or reduced the effectiven­ess of equipment designed to control diesel emissions.

Daimler previously disclosed that it was being scrutinize­d by the Justice Department and other U.S. authoritie­s over possible emissions violations. The company is also one of the carmakers being investigat­ed by European Union antitrust enforcers about possible collusion to limit antipollut­ion equipment’s effectiven­ess to reduce costs.

Stadler has denied wrongdoing while resisting shareholde­rs’ calls that he resign, despite evidence that the illegal software originated in his unit and that people who reported directly to him were involved. There was no indication from Audi or Volkswagen on Monday that he would resign or be forced out.

Days after the diesel-cheating at Volkswagen first same to light in September 2015, Martin Winterkorn resigned as the company’s chief executive. Last month, the U.S. Justice Department indicted Winterkorn on fraud charges in connection with the emissions deception.

But Volkswagen has retained many of Winterkorn’s close associates, including Stadler. The company, which has insisted that the wrongdoing was confined to a small group of engineers, has been reluctant to clean house.

Hans Dieter Pötsch, Volkswagen’s chief financial officer throughout the time the software was in use, is now chairman of the company’s supervisor­y board.

Winterkorn was succeeded by Matthias Müller, another longtime insider who had worked at Audi under Stadler. Müller resigned under pressure in April in part because he was having trouble moving Volkswagen past the scandal.

The new chief executive, Herbert Diess, is a former BMW manager who joined Volkswagen a few months before regulators in the United States discovered the cheating. Diess is an outsider by Volkswagen standards, but it is probably too early to judge whether he can shake the scandal’s stigma more effectivel­y than his predecesso­r.

 ?? Christof Stache / AFP / Getty Images file ?? German prosecutor­s on Monday raided the home of Rupert Stadler, chief executive of Volkswagen subsidiary Audi.
Christof Stache / AFP / Getty Images file German prosecutor­s on Monday raided the home of Rupert Stadler, chief executive of Volkswagen subsidiary Audi.

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