Audi CEO Arrested As Diesel-Emissions Scandal Spreads

Munich prosecutors have arrested Audi CEO Rupert Stadler, also a member of parent company Volkswagen’s board, on concerns he might try to suppress evidence, in what is the highest-profile arrest of a Volkswagen executive since the diesel emissions scandal exploded into public view nearly three years ago.

The arrest comes a month after Audi admitted that another 60,000 A6 and A7 models with diesel engines could have “software emissions issues,” and more than two months after Volkswagen CEO Matthias Mueller stepped down and was replaced by Herbert Diess, formerly the CEO of the company’s core VW unit, according to the BBC.

While former VW Group CEO Martin Winterkorn has been charged by US authorities, Stadler is the first executive to be taken into custody, and perhaps it’s about time: the emissions scandal provided ample evidence that Volkswagen had probably the worst executive oversight in Europe, and that a real criminal conspiracy had unfolded in the highest ranks of the company. The only real surprise is that it’s taken this long: US authorities blew the lid off the company’s emissions test-defeating software in September 2015 – nearly three years ago. Since then, the scandal has spread from the VW unit to other Volkswagen subsidiaries, and beyond: BMW and Daimler have also faced allegations of emissions cheating, as has American car maker General Motors.

More surprising still has been Volkswagen’s steadfast support of Stadler, who retained the backing of his fellow board members, including the influential Porsche-Piech families that own majority voting rights in Volkswagen, according to the Financial Times. The arrest was first reported in Germany’s Der Spiegel. 

The company issued a statement on Stadler’s arrest to Reuters.

“We confirm that Mr Stadler was arrested this morning. The hearing to determine whether he will be remanded is ongoing,” the spokesman said, adding that the presumption of innocence applied to Stadler’s case.

The CEO has previously survived calls by minority shareholders to step down, and yet in the face of threats the company not only defended Stadler, it extended his contract and promoted him to the head of a new “premium” cars division. The new role gave him sales responsibilities group-wide. The company will likely continue to stand by him as lawyers haggle for his release.

The company maintains that there’s no evidence to suggest Stadler knew of the cheating, though after Munich prosecutors raided Stadler’s apartment (and one other Audi boardmember) they named Stadler as a suspect. They’ve also said they’re investigating 20 suspects whom prosecutors believe were aware of Audi’s diesel engine scheme.

In light of today’s development, expect more imminent arrests as it is unlikely, given the number of Audi employees currently under investigation, that this will be the last shoe to drop.