German Prosecutors Open Investigation Into VW’s Winterkorn

28 Sep 2015 | Author: | No comments yet »

Former VW boss Winterkorn investigated for fraud.

German prosecutors launched an investigation on Monday into fraud allegations against former Volkswagen boss Martin Winterkorn, showing their determination to get quickly to the bottom of a scandal over rigged emissions tests that has rocked the global car industry. The cancellation was confirmed Monday — when German prosecutors said they were investigating Winterkorn over VW’s emissions-rigging scandal — by the Hungarian subsidiary of Audi, majority-owned by Volkswagen. The German company also suspended three top engineers, sources familiar with the matter told Reuters, as it tries to get to grips with a crisis that has knocked more than a third off its market value and could harm Germany’s economy. The investigation will concentrate on the suspicion of fraud committed through the sale of vehicles with manipulated emissions data, and aims to determine who was responsible, prosecutors in Braunschweig said in a statement.

Volkswagen has admitted cheating diesel emissions tests in the United States but Germany’s transport minister says it also manipulated tests in Europe, where it has much bigger sales, and it faces the worst business crisis in its 78-year history. In the German system, anyone can file a criminal complaint with prosecutors, who are then obliged to examine it and decide whether there is enough evidence to open a formal investigation. Winterkorn, replaced as chief executive on Friday by company veteran Matthias Mueller, said when he quit last week that he was not aware of any wrongdoing on his part and wanted to give the company a new start. She said it was too early to say if and when prosecutors may try and interview Winterkorn himself, and that she did not know whether he already had an attorney to represent him.

The crisis is an embarrassment for Germany, which has for years held up Volkswagen as a model of its engineering prowess and has lobbied against some tighter regulations on automakers. Winterkorn, Volkswagen’s CEO since 2007, resigned Wednesday — days after the world’s top-selling carmaker admitted that it had rigged diesel emissions to pass U.S. tests during his tenure. The German car industry employs more than 750,000 people and is a major source of export income. “The car industry is crucial for the German economy.

Audi said Monday that the engine in question was built into 1.6-liter and 2-liter turbo diesel models in the A1, A3, A4, A6, TT, Q3 and Q5 ranges, news agency dpa reported. In a sign of Volkswagen’s own efforts to tackle the crisis, sources close to the matter said it had suspended Heinz-Jakob Neusser, head of brand development at its core VW brand. Also suspended were Ulrich Hackenberg, the head of research and development at premium brand Audi who oversees technical development across the group, and Wolfgang Hatz, R&D chief at sports-car brand Porsche who heads group engine and transmissions development, they said. A European environmental organization says it has found some new models of Mercedes, Volkswagens, BMWs and other new cars consume much more gasoline than lab tests claim. Winterkorn, who was at the helm of Volkswagen for nine years and was the highest paid CEO on Germany’s blue-chip DAX stock market last year, also could not be reached for comment.

The organization, Transport & Environment, said Monday it had found no proof the cars are equipped with the same sort of “defeat devices” installed on diesel-powered Volkswagens to enable them to cheat on emissions tests. It will have to fix programming it has said is in some 11 million cars worldwide, far more than the 482,000 originally identified by U.S. authorities. A source close to Volkswagen’s board said its executive committee would meet on Wednesday to discuss the appointment of U.S. law firm Jones Day to lead an external investigation.

Two German newspapers said on Sunday Volkswagen’s own staff and one of its suppliers had warned years ago about the illegal use of so-called “defeat devices” to detect when a car was being tested and alter the running of its diesel engine to conceal their emissions of toxic nitrogen oxides. But it said the gap between lab and road tests had grown to such an extent for emissions of both carbon dioxide and nitrogen oxides that further investigation was needed to discover what car makers were doing to manipulate results. “The Volkswagen scandal was just the tip of the iceberg,” said Greg Archer, clean vehicles manager at T&E, adding the gap between lab tests and road performance cost a typical driver 450 euros ($504) per year.

There were signs on Monday the vehicles would be recalled and refitted, with Volkswagen’s Swiss distributor saying a plan to refit almost 129,000 cars in its country would be presented to Swiss transport authorities in October. Spain’s industry minister said he would ask Volkswagen’s local Seat brand to pay back subsidies it had received for ‘fuel-efficient’ cars that broke rules. “VW is in a dramatic situation. Volkswagen and other European manufacturers have promoted “clean diesel” technology, but the suggestion this was achieved by cheating on tests could affect the viability of the entire diesel sector.

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