VW Recovery Dealt Blow by Poetsch Probe, Audi Cheating Report

  • Prosecutors in Braunschweig probes alleged market manipulation
  • Bild newspaper says California found defeat software in Audis

VW's Mueller: We're Looking Ahead Confidently

Volkswagen AG’s efforts to emerge from the diesel-emissions scandal were dealt a double blow after German prosecutors extended their probe to Chairman Hans Dieter Poetsch and a newspaper reported Audi installed additional cheating software in some of its cars.

Europe’s largest automaker has struggled to extricate itself from the crisis, which erupted in September 2015 after Volkswagen admitted to rigging about 11 million cars worldwide to cheat on emissions tests. Poetsch, who was chief financial officer when U.S. authorities were investigating, was installed as chairman in the aftermath of the revelations to help stabilize the company. Audi, which developed some of the engines involved in the scandal, is the group’s biggest profit contributor and is critical to Volkswagen’s recovery plan.

In an investigation into allegations of market manipulation, German prosecutors named Poetsch as a third suspect after interviewing more witnesses and examining “other sources,” Klaus Ziehe, spokesman for the Braunschweig prosecutors’ office, said Monday by phone. “Initial evidence” suggests that Poetsch may have been involved, he said.

In the U.S., environmental authorities in California discovered that certain Audi gasoline and diesel models include software that direct the engines to burn less fuel and emit less carbon-dioxide on test stands than on the roads, Germany’s Bild newspaper reported on Sunday. The findings made over the summer apply to automatic-transmission cars including the Audi A6 and A8 sedans and the Q5 sport utility vehicle, the newspaper said. Audi had stopped installing the defeat devices in new vehicles by that time, Bild said.

When the steering wheel of those vehicles was turned more than 15 degrees, as if backing out of a parking space, the emissions-limiting software disengaged, Bild reported. An Audi spokesman declined to comment on the Bild report, citing ongoing negotiations with authorities.

Family Support

Volkswagen reasserted its position that management “fulfilled its disclosure obligation under German capital markets law,” the company said in a statement. Meanwhile, Wolfgang Porsche, head of the industrial clan that controls the majority of Volkswagen’s voting shares, said the families “absolutely stand behind Mr. Poetsch.”

Poetsch was CFO of Volkswagen from 2003 to 2015 and also sits on boards at the Porsche and Audi units. The market-manipulation investigation by Braunschweig prosecutors is also targeting former Chief Executive Officer Martin Winterkorn and VW brand chief Herbert Diess over how they disclosed the scandal to investors. 

While Volkswagen has settled civil penalties in the U.S. related to rigged 2.0-liter diesel cars and is recalling those vehicles in Europe, issues related to larger 3.0-liter motors remain unresolved. The discussions relate to about 80,000 cars with diesel engines developed by Audi. By secretly adjusting how cars performed under test conditions versus on the road, Volkswagen was able to market diesel engines’ efficiency while not sacrificing driving performance.

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