Audi CEO arrested in Germany in emissions cheating probe

MUNICH, Germany - Raising concerns over potential evidence tampering, prosecutors in Munich have ordered the arrest of the CEO of luxury automaker Audi as part of the emissions cheating scandal.

Prosecutors said on Monday that Stadler was arrested at his home in Ingolstadt in the early hours on Monday amid fears that he might hinder its investigation into the scandal, plunging Volkswagen, which owns Audi, into a leadership crisis.

The arrest of Audi CEO Rupert Stadler made him the most senior Volkswagen officials to be taken into custody over the scandal that has gripped the German automaker since 2015, when it first admitted having cheated on the emissions test.

55-year-old Stadler has worked for Audi parent company Volkswagen since 1990 and was appointed to Volkswagen's management board in 2010.

On Monday, the Munich prosecutor’s office said in a statement, “As part of an investigation into diesel affairs and Audi engines, the Munich prosecutor’s office executed an arrest warrant against Rupert Stadler on 18 June 2018.”

Adding that a judge in Germany ordered that Stadler be remanded in custody to prevent him from obstructing or hindering the diesel investigation.

Confirming Stadler’s arrest, Audi and VW reiterated that he was presumed innocent.

Subsequently, in a brief statement, a spokesman for Porsche SE, which controls VW and Audi, said the arrest would be discussed at a supervisory board meeting on Monday.

Volkswagen spokesman Nicolai Laude also confirmed that the company's supervisory board would discuss the matter, adding, "The principle of the presumption of innocence continues to apply to Mr. Stadler.”

Subsequently, shares in Volkswagen dropped by 2.6 percent in Frankfurt.

Stadler’s arrest comes days after Munich prosecutors said they had searched his home for evidence as part of an investigation that has been underway for over a year.

Further, reports pointed out that Stadler’s arrest comes at a time when the VW group chief executive, Herbert Diess, has implemented plans to introduce a new leadership structure, accelerating the group’s shift towards electric vehicles.

In May this year, the U.S. filed criminal charges against the former chief executive of the automaker, Martin Winterkorn.

Winterkorn was indicted by a federal grand jury in Detroit on diesel emissions cheating charges and prosecutors alleged that they believe the plot reached the top of the world's largest automaker.

At the time, 70-year-old Winterkorn was slapped with a four-count indictment, including with three counts of wire fraud and one of conspiring with other senior VW executives and employees to violate the Clean Air Act. 

Winterkorn faces up to five years in prison and a $250,000 fine on the conspiracy charge, along with up to 20 years in prison and a $25,000 fine on the wire fraud charges. 

Winterkorn became the ninth person charged by U.S. authorities in the case and at the time, two of them had already pleaded guilty and were serving jail time, while six others are still in Germany.

However, Winterkorn is unlikely to face American authorities since Germany does not extradite its nationals to countries outside the EU.

On Monday, Munich prosecutors clarified that Stadler’s arrest was not made at the behest of U.S. authorities. 

They also added that Stadler would be questioned by Wednesday after he has spoken to his lawyers.

In September 2015, the German carmaker Volkswagen admitted that since 2009, nearly 600,000 cars it sold in the U.S. were fitted with "defeat devices" designed to circumvent emissions tests.

VW revealed that it had programmed its diesel engines to activate pollution controls when being tested in government labs and turning them off when on the road - and some 11 million of its cars were affected by the scandal worldwide.

The acknowledgement sparked the biggest crisis in the German carmaker’s history and triggered a regulatory crackdown in the auto industry.

The devices were initially found in VW's cars, but its Audi subsidiary has also been embroiled in the scandal.

Last month, Audi admitted that another 60,000 A6 and A7 models with diesel engines have emission software issues.

The recently released number added to the 850,000 cars that Audi recalled last year.

So far, the scandal has cost the VW group over 25 billion euros ($29 billion) in buybacks, fines and compensation.