Tangled web

Audi CEO caught up in Dieselgate probe

Four-ring circus. Source: Reuters

Germany’s Dieselgate scandal finally caught up with Audi chief executive Rupert Stadler as prosecutors announced he was the target in an investigation for fraud and false certification. The CEO had long been spared attention despite mounting evidence that he had to have known of the emissions manipulation devices in Audi vehicles.

Investigators on Monday raided Mr. Stadler’s home and disclosed that he and another executive board member have been under suspicion since May 30. Prosecutors didn’t name the second board remember but press reports said it is Bernd Martens.

The announcement brings the number of current and former Audi executives under investigation to 20. Volkswagen, Audi’s parent company, had raised Mr. Stadler to chief of sales for premium cars in the entire group just two months ago when it named Herbert Diess chief executive of the group. VW declined to comment on the latest news.

Audi suspended delivery of upmarket V6 and V7 models last month, citing irregularities in emissions. Germany’s Federal Motor Transport Authority ordered the mandatory recall of 60,000 of those vehicles to fix the problem.

Stadler seemed to be skating through the scandal for months.

Mr. Stadler seemed to be skating through the scandal for months even though Audi had originally developed the diesel motors at its core, and cooperating witnesses said the CEO knew and approved of the deception. Ulrich Weiss, the former chief of diesel development who was fired by Audi, accused Mr. Stadler in court of knowing about the emissions manipulation since 2010. Mr. Stadler has repeatedly denied the charge.

Mr. Weiss, for his part, came to Audi only in 2011 and has been able to document for prosecutors that he has only worked on “clean” engines and in fact pushed Audi management to come clean about the cheating devices. Not only is he no longer a suspect in the investigation, he has become a star witness against his former employer.

The problem with the V6 and V7 models goes beyond the defeat devices that showed one level of toxic emissions during testing while emitting much higher levels in actual road performance. The V6 engines with output more than 200 kilowatts (270 horsepower) rely on the reagent AdBlue to reduce harmful nitrogen oxide emissions. Since customers didn’t like having to refill the relatively small AdBlue tank too often, Audi engineers regulated the flow of the reagent to drastically restrict it if necessary ahead of servicing. This allowed excessive quantities of the toxic gas into the air.

When the Dieselgate scandal first broke in 2015 with disclosure of cheating devices in some VW models, Mr. Weiss was charged with preparing a presentation about Audi’s diesel performance. That presentation spoke of range optimization, leaving little doubt about the trick being used to extend the supply of AdBlue between servicing. However, top management eliminated these references and even publicly announced shortly afterwards that the company didn’t use any manipulation devices.

When Mr. Stadler, Mr. Weiss and other top managers defended Audi diesels in the US, the problem with capping AdBlue was described in relatively harmless terms and Mr. Weiss’s very explicit charts and graphs were taken out, over his objections. When Mr. Weiss contacted US authorities to present his documents, Audi furloughed and then fired him.

All this has now come back to haunt Audi’s top management – first and foremost Mr. Stadler himself. He may not only lose his job but find himself facing serious charges in court. It is another setback for VW’s new CEO, Mr. Diess, who is trying to put Dieselgate behind the automaker and restore its reputation.

Mr. Diess himself is under investigation to determine if he learned of the emissions cheating when he joined VW in 2015 but failed to disclose this to investors or authorities before the scandal broke. As the Dieselgate probes continue to widen, Mr. Diess’s time as a top manager at BMW may also come under scrutiny.

Jan Keuchel is an investigative reporter for Handelsblatt, based in Düsseldorf. Stefan Menzel covers the auto industry. Darrell Delamaide adapted this article into English for Handelsblatt Global. To contact the authors: keuchel@handelsblatt.com and menzel@handelsblatt.com.

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