INSUBCONTINENT EXCLUSIVE:
Rupert Stadler's arrest raises fresh questions about Volkswagen's crisis management
Volkswagen AG's board was unable to agree on a new leader for its Audi unit after more than six
hours of debate Monday, with some members balking at making a hasty choice after the unexpected arrest of the brand's longtime chief.Plans
by VW stakeholders to quickly appoint Audi sales boss Bram Schot as the unit's interim chief executive officer following the arrest of
Rupert Stadler encountered resistance at a meeting of supervisory board members, and it's unclear when the situation will be resolved,
according to people familiar with the matter."The supervisory board members of VW and Audi haven't reached a decision yet today and continue
to explore the situation," the automaker said in an emailed statement late Monday
A company spokesman declined to elaborate
Stadler's arrest, over his role in the manufacturer's diesel-emissions scandal, is the first among VW group's management board members.Board
members had planned a routine gathering at the headquarters in Wolfsburg, Germany, but they were caught by surprise by Stadler's arrest, and
the get-together quickly escalated into a crisis meeting, said the people, who asked not to be identified because the deliberations aren't
Audi is the VW group's largest profit contributor and it can ill-afford a vacuum at the top
Stadler was arrested earlier Monday at his home in Ingolstadt, Germany.With Schot, Audi's head of sales and marketing since September, VW
would be going with an executive so far untainted by the emissions scandal
The 56-year-old joined VW from Daimler AG in 2011, holding positions at the commercial-vehicles unit
But some opposition emerged to choosing Schot, and the parties -- including board members, labor representatives and government officials --
will review options on Tuesday, said the people.Stadler's arrest raises fresh questions about Volkswagen's crisis management that's
alternated between stonewalling and cooperation, while protecting its most senior managers amid swirling allegations that some of the key
leaders might have been informed earlier about the diesel-engine cheating than they acknowledged so far.Munich prosecutors sought to take
Stadler, 55, into custody because of the risk he may tamper with evidence, they said in a statement
Prosecutors acted after wiretapping his phone, Sueddeutsche Zeitung reported
Last week, authorities raided his house and named him a suspect in their probe of fraud and falsifying public documents in relation to
selling diesel cars in Europe.Stadler is willing to be questioned later this week and his lawyers won't challenge his arrest for now,
prosecutor Stephan Necknig said
Investigators had indications Stadler, who hasn't been charged, may influence witnesses in the probe, he said
Pretrial detention can last as long as three months and can be extended while cooperative suspects usually leave custody much faster.The
arrest, which comes days after Volkswagen agreed to pay a $1.2 billion (1 billion-euro) fine imposed by German prosecutors, spells more
trouble at the top of one of Volkswagen's critically-important divisions
Stadler oversees a unit that generates vital profits and provides technology including engines to a number of the group's brands --
including Porsche.Even if Stadler wasn't directly involved in the diesel-engine manipulation, there has been an obvious lack of oversight at
Audi that stretched over years, Juergen Pieper, a Frankfurt-based analyst at Metzler Bank, said by phone.Volkswagen declined 3.1 percent
Monday to 156.06 euros, the lowest since February, extending losses this year to 6.2 percent.Stadler has led Audi since 2007
VW's controlling Porsche and Piech families had so far backed him despite a constant drumbeat of allegations ever since Audi got embroiled
in the diesel scandal in November 2015
regulators' claims it used illegal engine software, the carmaker has struggled to put an end to a drip-feed of negative diesel-related
headlines as German authorities stepped up scrutiny on its domestic market as well.Ulrich Weiss, a former top engineer at Audi's engine
development operation, told a German labor court last year Stadler had been aware of the illegal software earlier than he admitted
Weiss and Audi have since settled the legal dispute over his firing.Stadler joined Volkswagen's Audi unit in 1990, where he assisted the
unit's then-CEO Ferdinand Piech, the famed and feared later Volkswagen chairman
At Audi, he also worked alongside then-head of development Martin Winterkorn, who resigned as VW CEO days after the cheating scandal first
Justice Department in May issued a warrant for Winterkorn's arrest.VW still faces legal proceedings in 55 countries and investigations into
stock-market manipulation in its home market
The company has earmarked more than 27 billion euros for fines, buybacks and costs
Investors have accused the company of informing investors too late about the probe, a view the carmaker has contested.Prosecutors in Munich,
Stuttgart and Braunschweig are continuing their investigations of VW and its units
In April, Stuttgart authorities arrested a senior engine manager at Porsche, after conducting raids at 10 sites
Wolfgang Hatz, who ran motor development from 2007 to 2011, has been in custody since September
Giovanni Pamio, a former Audi engineer, was arrested last year and released four months later after extensive questioning
The Munich probe now involves 20 people linked to Audi.Two VW employees are currently serving prison terms in the U.S
James Liang, a veteran company engineer who pleaded guilty to conspiracy, was sentenced to 40 months in custody
Oliver Schmidt, VW's compliance liaison with American regulators, pleaded guilty in August to one count of conspiracy to defraud the U.S
He received a seven-year sentence."The ongoing public bickering continues to undermine shareholder, customer and employee confidence,"
Evercore ISI analyst Arndt Ellinghorst wrote in a note
"Almost three years after the diesel scandal broke, it takes the police to take action against the Audi CEO."(Except for the headline, this
story has not been edited by TheIndianSubcontinent staff and is published from a syndicated feed.)
