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Audi Manager Caught in Dieselgate Web

ARCHIV - Ein Audi Q5 steht am 29.02.2012 in der Produktion im Audi-Werk in Ingolstadt (Bayern) in der Endkontrolle. Am 29.07.2016 stellt das Unternehmen die Halbjahreszahlen vor. Foto: Armin Weigel/dpa +++(c) dpa - Bildfunk+++
Volkswagen's scandal is costing jobs at Audi too.
  • Why it matters

    Why it matters

    The revelations about Audi’s development chief implicate management in the scandal and complicate the carmaker’s negotiations with authorities.

  • Facts

    Facts

    • Audi’s head of development will be suspended this week as part of the investigation into emissions cheating.
    • Investigations show that Stefan Knirsch, an Audi board member, knew about the use of cheat software and lied under oath.
    • Mr. Knirsch was brought in last year to replace Ulrich Hackenberg, the disgraced top engineer at Audi and the VW group.
  • Audio

    Audio

  • Pdf

 

Volkswagen’s Audi head of development will be suspended this week, the latest head to roll in the Dieselgate emissions scandal which broke last year.

The suspension of Stefan Knirsch follows revelations by law firm Jones Day, which is investigating the scandal and discovered documents which implicate the development chief, according to sources close to the affair.

Volkswagen is involved in ongoing investigations into the scandal which affects 11.5 million cars worldwide, reducing emissions data in its VW, Audi, Skoda, and Seat car brands.

While Volkswagen negotiates settlements with the authorities, these are complicated by ongoing revelations about who knew what when.

Now, information has emerged during investigations by Jones Day, the law firm investigating the scandal, that massively implicates Mr. Knirsch.

The news comes unexpectedly for the development chief who had a job most engineers dream of. He had worked at Audi, then at Porsche, then back to Audi. But in fall 2015, he hit a setback. Mr. Knirsch was promised a job on the board at rival Daimler but the carmaker then decided not to award him the post although he was highly qualified. News of Dieselgate had just emerged and Daimler didn’t want to risk that he had been involved.

That wasn’t a big deal for Mr. Knirsch in the end as the scandal over manipulated emissions software created a second chance for him at Audi. When development chief Ulrich Hackenberg had to vacate his post at Audi in a hurry in September 2015, the VW subsidiary suddenly remembered Mr. Knirsch and appointed him to lead technical development in Ingolstadt, where the motto “Vorsprung durch Technik” – or “Advancement through technology” – shapes the company brand.

Now the revelations by the law firm suggest Mr. Knirsch was involved in the cheating scandal. Under questioning by the lawyers, he is also supposed to have implicated other employees, according to insiders.

Last Thursday, Audi’s supervisory board met to discuss the law firm’s findings.

According to a report in Ingolstadt’s Donaukurier newspaper, the committee pulled the emergency brake, suspending Mr. Knirsch.

 

Stefan Knirsch by Sven Simon picture alliance
Mr. Knirsch. Source: Picture Alliance

 

At the meeting the investigators were presented with the findings of Jones Day, according to insiders. After that, Mr. Knirsch was suspended and he will abdicate his board responsibilities. He has gone on holiday and according to insiders, negotiations will take place in the coming days about future steps.

Mr Knirsch will continue to draw his salary, a fact criticized by opponents, but according to Audi this ensures he will be available for further investigations. Under German law, employees are obliged to provide information if requested by the company.

Audi, Volkswagen and Mr. Knirsch declined a request to comment on the particulars of the investigation.

Mr. Knirsch’s departure is just the latest piece of bad news for both Audi’s chairman of the board Rupert Stadler and the Volkswagen group as a whole. Exactly one year after the emissions scandal broke, rocking Volkswagen and Audi to the core, the wave of scandal has reached management level.

19 p15 Audi and Dieselgate-01

This latest case shatters the hope that Volkswagen might be close to moving on from the scandal. For Audi, this is the fourth time in as many years that there the development chief’s post is empty. And at the VW group, the question continues to be asked, who knew what and when about the massive emissions cheating? And how does it affect the ability of a corporation to heal itself when a manager joins the board even after competitors wouldn’t touch him?

Stefan Knirsch knows the Volkswagen group inside out, having started with motor assembly at Audi in 1990. He then moved across to Porsche, which at that time was not yet owned by Volkswagen. From there he moved on to automotive and military components manufacturer Rheinmetall. In May 2013, Audi’s chairman Rupert Stadler called Mr. Knirsch back to Ingolstadt. He took over the leadership of the engine development department.

This period of his work is especially incriminating as it was during this time that the engines were developed which were installed with a defeat device, according to the U.S. environmental authorities.

That’s the setting in the engine control systems that the motor to recognize when the car’s on a testbed and switch the control over to “clean.” Because the questionable motors had already come onto the market in 2013, Mr. Knirsch was probably only peripherally involved in its development. But he probably knew about the manipulation of the self-actuator, an Audi manager has remarked.

Even if Volkswagen sends Mr. Knirsch into exile, the case is an enormous burden on the company. The supervisory board – and also Mr. Stadler himself – have to ask themselves why they called him up to the board in 2016. Yes, Mr. Knirsch was well liked by the management team and popular for his ability to package complicated issues into sound-bites – that even the layman outside the industry could understand. But he was part of the system.

Mr. Knirsch had faced the questions of auditors at Audi many times, over whether or not he knew about the emissions-cheating, a participant said. He constantly and credibly denied any knowledge.

According to a report in the German newspaper Bild am Sonntag, he allegedly even lied under oath. It’s now precisely this part of his testimony that the accounts of other employees now cast doubt upon. And in this delicate situation he’s become a liability.

Audi still hasn’t come to an agreement with U.S. authorities over the recall of its 3.0 liter diesel motors and compensation payments. This fresh round of changes at Audi weakens the carmaker’s negotiating position with the U.S. authorities who continue to call for a new beginning at the Volkswagen group.

 

Martin Murphy covers the auto industry for Handelsblatt. Markus Fasse covers the aviation and automobile industries for Handelsblatt. To contact the authors: murphy@handelsblatt.com, fasse@handelsblatt.com

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