Emissions scandal spreads to Audi and Skoda models
Prosecutors in Germany have launched a criminal probe into the former VW boss as the scandal stretches to luxury Audi cars and Skoda models
Prosecutors in Germany have opened a criminal investigation into former Volkswagen chief executive Martin Winterkorn in the wake of the emissions-rigging scandal which has engulfed the German auto giant.
The probe is understood to concentrate on accusations of fraud after it was revealed that VW had fitted 'defeat' devices in millions of its diesel cars worldwide to cheat government emissions tests.
The investigation aims to establish who was responsible and will look at Mr Winterkorn's role in the worst crisis to hit VW in its 78-year history, according to a statement from prosecutors in Braunschweig, Germany.
The prosecutors have also received a number of criminal complaints, including one from Volkswagen.
Under the German system, anyone can file a criminal complaint with prosecutors, who then must examine the complaint and decide whether there is enough evidence to open a formal investigation and for charges to be brought.
It is essentially the equivalent of a police investigation in the UK.
Prosecutors say it is too early to determine if and when they may try and interview Mr Winterkorn himself.
"This is a very broad case and in other such investigations it has taken many months, sometimes years," a spokesman told reporters.
Mr Winterkorn stepped down as CEO last week and was replaced by VW's now former Porsche brand boss Matthias Mueller after the emissions-rigging scandal wiped billions of pounds off the value of VW and tarnished its previously solid reputation for reliability and quality.
Mr Winterkorn has denied knowing about the pollution-cheating software, and issued a statement at the time of his resignation saying: "I am doing this in the interests of the company even though I am not aware of any wrongdoing on my part."
Some shareholders and analysts are critical about VW's management changes, in which veteran insiders have been re-shuffled to key positions.
Hans Dieter Poetsch, currently the finance chief, will become chairman of the board in November. Winfried Vahland will take over a newly created position with responsibility for all of North America. Michael Horn, who earlier this week admitted the company had “totally screwed up”, will remain as the US chief and report to Mr Vahland.
Dr Hans-Christoph Hirt, a director at fund manager Hermes, slammed VW's choice of 'corporate insiders' to take charge of the company, saying the move "raises some real doubts whether the key shareholders have recognised the need for fundamental reform and a real new beginning".
He said: "We have repeatedly raised concerns about aspects of Volkswagen’s corporate governance.
"We plan to attend the Extraordinary General Meeting of Volkswagen on November 9 and on behalf of a group of investors will explain our concerns and suggest changes to the company’s corporate governance and culture to other shareholders and the management and supervisory boards."
The news came as Audi announced that the device used in parent company Volkswagen's cars to manipulate emissions tests was also fitted in 2.1 million of its own luxury cars.
Of the 2.1 million diesel-powered Audis affected, some 1.42 million are registered in Western Europe, with 577,000 in Germany.
There are almost 13,000 vehicles containing the cheat software in the United States, a spokesman for Ingolstadt-based Audi said.
The engine in question was built into 1.6-litre and 2-litre turbo diesel models in the A1, A3, A4, A6, TT, Q3 and Q5 ranges.
The cars involved have engines in the "euro 5" emissions category. Those with the newer "euro 6" engines aren't affected by the emissions scandal.
"We’re working at full speed to find a technical solution," said Juergen de Graeve, a spokesman for Audi.
“Once we have that solution, we’ll write to customers and we’ll upgrade the cars so that they’re within emissions regulations.”
Skoda, which is also part of the VW family, has said that 1.2 million of its cars worldwide contain the pollution manipulation device, according to reports.
Volkswagen shares have fallen by more than 7pc today.
Meanwhile, it has also emerged that VW has suspended the R&D chiefs of its core VW brand, luxury Audi division and Porsche unit.
The carmaker's supervisory board last Friday agreed to put a number of employees on leave until the details of affair were cleared up.
VW sparked global outrage last week when it admitted that 11 million of its diesel cars are fitted with special gadgets that activate pollution controls during tests but secretly turn them off when the car is on the road.
The deception has wiped billions off the value of the car giant and is set to land the German auto maker with substantial penalties and recall costs as governments and regulators around the world launch investigations - some of the criminal - into the scandal.
The nations carrying out probes include the UK, South Korea, India, Brazil, Australia, France, Italy, South Africa and Norway - whose economic crime unit has opened an investigation.
The US Justice Department has also launched a criminal probe.
Executives at VW have been accused of masterminding the emissions scandal from the company’s headquarters in Wolfsburg.
The chain of command of those involved in the rigging deception stretched all the way back from the US to VW’s home patch, it has been claimed, with executives in Germany controlling the key aspects of tests which the firm now admits were manipulated.
Testers at a California site evaluated vehicles and results were sent back to Germany before being passed to the US Environmental Protection Agency.
If any car failed to meet emissions targets, a team of engineers from Volkswagen headquarters or Audi’s base in Ingolstadt was flown in.
UK Prime Minister David Cameron has condemned Volkswagen over its rigging of emissions tests.
“If companies are breaking the rules and fiddling their figures, that is unacceptable,” Mr Cameron said as he flew to New York for a visit to the United Nations. “Emissions standards matter and they have to be properly policed and delivered.”
Any move to restrict sales would be “all a matter for the Transport Department,” he said.
The regulators have asked VW to come up with a plan by October 7 to show when its cars will meet emissions requirements.
The German government has also denied claims that it knew about the rigged diesel emissions tests at VW before the story broke.
"The transport minister found out about the allegations of manipulation the weekend before last," a spokesman said.
"We had no previous knowledge that this system was being used."
Volkswagen has set aside €6.5bn to cover damages including fixes for the vehicles, potential regulatory fines and lawsuits, but the cost of the fallout is expected to be much larger.
The FBI in Detroit is reportedly handling a US criminal investigation of the German company, while 27 state attorney generals have unleashed a joint investigation into the blighted car maker.
Thse 27 states are reportedly going to send subpoenas to the company - these are essentially writs compelling testimony or evidence to be produced or face a penalty.
Private law firms are also lining up to take on VW, with a class action suit already being filed by a Seattle law firm.
The automobile giant already faces at least 60 lawsuits filed in federal courts in the US by consumers alleging the company committed fraud by cheating on emissions tests, which means their cars might not be as efficient as they believed them to be.
In the UK, hundreds of Volkswagen owners have registered their interest in taking part in group legal claims, according to law firms Slater and Gordon and Leigh Day.
Dutch investor group VEB, which represents shareholders, has issued a liability claim against Volkswagen for the losses incurred by investors in the wake of the emissions fraud.
The group said: “The liability in question concerns the incorrect, incomplete and misleading information provided by Volkswagen…this manipulation kept the Volkswagen share price artificially high.
“In doing so Volkswagen acted unlawfully; not only towards car owners but also its own shareholders.”
Meanwhile, European environmental organisation, Transport & Environment, has said it has found some new models of Mercedes, Volkswagens, BMWs and other new cars consume much more petrol than lab tests claim, according to reports from PA.
The organisation said it had found no proof the cars are equipped with the same sort of "defeat devices" installed on diesel-powered Volkswagens, but called on European Union governments to broaden their probes into the scandal to cover petrol cars as well.
Both the EU and US have announced plans to crack down on the way car emissions are measured.
Currently, manufacturers test emissions in near-perfect lab settings, using smooth tyres unsuitable for roads, engine lubricants so expensive they’re beyond the reach of most consumers and even clip off wing mirrors to achieve required emission results.
US regulators and the European Commission have both said they will introduce rules forcing manufacturers to test car emissions under real world road conditions.
The EU is expected to introduce new legislation in early 2106, although French ministers on Thursday called for this to be brought forward to before the end of the year.
In the meantime, new VW boss Matthias Mueller has pledged to win back the trust of customers.
“My most urgent task is to win back trust for the Volkswagen Group by leaving no stone unturned and with maximum transparency, as well as drawing the right conclusions from the current situation,” he said on Friday.
Despite the turmoil at VW, the European Central Bank has not completely suspended the purchase of assets backed by VW loans under its quantitative easing programme, as reported last week.
The latest list of eligible collateral purchased by the ECB still includes securities issued by the carmaker.