Scandal over diesel emissions deepens
German authorities target a top executive at Audi in fraud case
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.