Audi CEO arrested in Germany over diesel scandal

Munich prosecutors, who earlier this month widened their probe into Audi, said Rupert Stadler was being held due to fears he might hinder their investigation into the scandal, plunging Volkswagen into a leadership crisis.

News of the arrest comes as Volkswagen’s (VW) new group CEO Herbert Diess is trying to introduce a new leadership structure, which includes Stadler, to speed up a shift toward electric vehicles in the wake of its “dieselgate” troubles.

“His arrest is another low point in VW’s diesel saga,” said Evercore ISI analysts, who have criticized the company for being slow to reform. “Almost three years after the diesel scandal broke, it takes police to take action against the Audi CEO.”

VW admitted in September 2015 to using illegal software to cheat U.S. emissions tests on diesel engines, sparking the biggest crisis in the company’s history and leading to a regulatory crackdown across the auto industry.

The US filed criminal charges against former VW CEO Martin Winterkorn in May, but he is unlikely to face the authorities there as Germany does not extradite its nationals to countries outside the European Union.

The Munich prosecutors said Stadler’s arrest was not made at the behest of US authorities. The executive was arrested at his home in Ingolstadt in the early hours on Monday, they said.

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

A judge in Germany has ordered that Stadler be remanded in custody, it said, to prevent him from obstructing or hindering the diesel investigation.

Audi and VW confirmed the arrest and reiterated Stadler was presumed innocent unless proved otherwise. Stadler himself was not immediately available for comment.

Stadler has been under fire since Audi admitted in November 2015 - two months after parent VW - that it also installed illegal “defeat device” software to cheat US emissions tests.

VW has so far set aside around $30 billion to cover the cost of fines, vehicle refits and lawsuits related to its emissions test cheating. Most of its problems have been in the US, where a nine people have been charged and two former VW executives have pleaded guilty and been sentenced to prison terms.

But investigations are continuing elsewhere. Last week, German prosecutors fined VW 1 billion euros ($1.2 billion) over the scandal.