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Audi CEO arrested in Germany over diesel emissions scandal

Rupert Stadler, chief executive of Volkswagen’s Audi unit, speaks last July in Barcelona. (Pau Barrena/Bloomberg News)

The chief executive of Audi, the luxury automaker owned by Volkswagen, was arrested Monday on suspicion of fraud in relation to the German carmaker’s emissions-cheating scandal.

Rupert Stadler, 55, was detained a week after his home was searched and German prosecutors said he was a focus of their probe into any manipulation of Audi emissions controls. Stadler is the first member of Volkswagen’s executive board to be arrested in connection with the diesel emissions investigation. In 2015, Volkswagen was discovered to have been using software during emissions testing to manipulate results.

Munich prosecutors said in a statement that Stadler was detained out of concern that he would suppress evidence needed for their investigation.

Mark Clothier, a spokesman for Audi, confirmed the arrest and declined to comment further, because the investigation is ongoing. He added that the “presumption of innocence continues to apply” for Stadler.

Volkswagen said three years ago that as many as 11 million of its vehicles were equipped with software meant to deceive emissions tests, including at least 2 million Audis. The company has pleaded guilty to fraud in the United States and was charged $25 billion in fines, penalties and restitution for owners and car dealers. Martin Winterkorn, then-chief executive of Volkswagen, resigned after the carmaker admitted to using the software.

Last month, U.S. prosecutors charged Winterkorn, 70, with conspiracy and wire fraud in relation to the diesel emissions case. The indictment from the Justice Department accused Winterkorn of conspiring with other Volkswagen executives to defraud the United States and of lying to customers about the cars being marketed as “clean diesel.” According to the Justice Department, Winterkorn is believed to be in Germany, where it is unlikely that he will be extradited. Winterkorn’s charges followed those of at least six other Volkswagen executives who have been indicted in the United States.

Some of Volkswagen’s diesel engines had a “defeat device” that made it possible for them to pass emissions tests, even though the vehicles were releasing more than 10 times the permitted amounts of nitrogen oxide, a gas that is harmful to human health and the environment.

German officials have been ramping up their enforcement of the diesel emissions regulations. Last week, German prosecutors fined Volkswagen 1 billion euros (about $1.16 billion) for not supervising the employees who designed the testing software. The German government last year accused Audi of cheating on its emissions tests for high-end models. It was the first time it faced charges of this kind in its home country, according to Reuters. Audi was asked to recall about 24,000 A7 and A8 models that it produced between 2009 and 2013.

Stadler joined Audi in 1990 as part of the sales and marketing team. He also worked in personnel and product planning before he became its chief executive in 2007.

The longtime Audi executive kept his spot at the top of the luxury car brand even after it was revealed that Audi vehicles had been equipped with software that could cheat emissions tests. Stadler was given more responsibility over group sales in April when Volkswagen named Herbert Diess as its new chief executive. Stadler was paid about 5 million euros (about $5.8 million) in 2017, according to Volkswagen’s annual report.

Volkswagen’s share price fell 2.2 percent in Europe on Monday, more than the 1.4 percent drop in the Deutsche Börse index in Germany.