2017-03-20 10:06:02
Offices of Volkswagen and Audi Chiefs Searched in Raid, Warrant Says

FRANKFURT — German officials included the offices of both Volkswagen’s chief executive and the head of the Audi division when they raided company premises last week as part of an investigation into emissions fraud, according to a copy of the search warrant.

The warrant, whose contents were viewed by The New York Times, was first reported on Sunday by the German newspaper Bild am Sonntag. It does not identify Matthias Müller, Volkswagen’s chief executive, or Rupert Stadler, head of the Audi luxury car division, as suspects in the case.

Investigators do not yet have enough evidence to determine who is responsible for illegally manipulating diesel motor software to deceive American clean-air regulators, according to the warrant.

But the warrant, signed by a judge in Munich, allowed investigators to seize documents and other items such as appointment calendars, copies of emails, mobile phones and electronic passwords from Mr. Müller and Mr. Stadler, and numerous other current or past Volkswagen and Audi employees.

The 13-page document portrays a much broader investigation than was previously known. It indicates that Volkswagen is far from dealing with the consequences of its emissions cheating a year and a half after it was first exposed. Volkswagen and Audi face a host of problems, including slipping market share in Europe and China, and can ill afford any further damage to their reputations.

The warrant, used by Munich prosecutors as part of an investigation that focuses on Audi’s role in the scandal, allowed officials to search company departments including sales, marketing, personnel, engine development and legal compliance, along with the executive offices. The document, which also included a map of Audi headquarters in Ingolstadt, Germany, names 47 people whose property is subject to seizure, including Mr. Müller and Mr. Stadler.

Eric Felber, a Volkswagen spokesman, said the company was cooperating fully with investigators and declined to comment further. Mr. Müller said last week that no current member of the Volkswagen management board, a group that includes Mr. Stadler, was involved in any wrongdoing.

Volkswagen has had to continually retreat from its initial assertion in 2015 that the deception was the work of a handful of rogue engineers. Volkswagen pleaded guilty in a Detroit court this month to charges that included conspiracy to violate the Clean Air Act. While maintaining that no members of the management board took part, Volkswagen acknowledged that the fraud involved numerous employees and departments.

In a statement of facts, Volkswagen said that its employees programmed pollution control equipment in diesel cars to operate at a reduced level except when software detected that an emissions test was underway. As a result, the cars spewed excess amounts of nitrogen oxides, which can cause respiratory diseases such as asthma and lung cancer.

The fraud reached from company headquarters in Wolfsburg to Volkswagen offices in the United States, and included employees in engine development, quality control and emissions compliance, the company admitted.

Volkswagen also conceded that, when it became clear that United States regulators were about to uncover the fraud, in-house lawyers encouraged other employees to destroy evidence.

There have been previous indications that the scandal extended to Volkswagen’s top ranks. German prosecutors have said that they consider Martin Winterkorn, the former chief executive, a suspect. They have also said they are investigating Hans Dieter Pötsch, the chairman of the supervisory board, on suspicion of violating securities laws by failing to inform shareholders as soon as he should have about risks from the diesel deception.

Mr. Winterkorn has said he was not aware of the illegal software until September 2015, shortly before the wrongdoing became public. Mr. Pötsch has said that he fulfilled his duties under German stock market laws.

Prosecutors in Munich have been concentrating on Audi’s role in the scandal while authorities in Braunschweig, near Volkswagen’s headquarters in Wolfsburg, have taken the lead in investigating the parent company. Ingolstadt, home of Audi’s flagship plant, is about 50 miles north of Munich.

The Munich investigation had attracted only modest attention until Wednesday, when officials appeared at Audi headquarters early in the morning with the search warrant and began taking possession of documents. Media coverage since then has cast an unwelcome spotlight on one of Volkswagen’s most important sources of profit.

Mr. Müller, 63, spent most of his career at Audi, rising to become head of product management before being named chief executive of Volkswagen’s Porsche division in 2010. He became chief executive of Volkswagen in September 2015 after Mr. Winterkorn resigned in the aftermath of the scandal. In addition to being chief executive, Mr. Müller is chairman of Audi’s supervisory board.

Mr. Stadler, 54, has been chief executive of Audi since 2007, and a member of the Volkswagen management board since 2010.

The Munich search warrant provided further detail about the engineering problems that led Audi employees to cheat in the first place, setting the stage for one of the biggest corporate scandals in automobile history. Audi has agreed to pay $1.2 billion to settle a consumer fraud lawsuit by the Federal Trade Commission involving about 80,000 vehicles with diesel motors. That is part of more than $22 billion that Volkswagen is paying in settlements and fines.

The deception at Audi originated in 2005 when the division first decided to begin marketing cars with diesel motors in the United States, according to the warrant.

The cars came with equipment that used a spray of urea solution to neutralize nitrogen oxides. But Audi engineers soon realized that the holding tanks in the cars could not hold enough of the urea fluid to last between regular 15,000-mile service intervals, while still meeting the United States’ stricter limits on nitrogen oxides.

Fearful that extra maintenance chores would turn off buyers, the engineers devised software that reduced consumption of the fluid, except when the software detected that the car was being tested on rollers in a lab. The software, known as a defeat device, was “designed so that substantial reduction of emissions functioned only on the roller test bed,” the warrant said.

According to the warrant, investigators are still trying to determine who “took initiative for this development, which levels of company hierarchy were informed, and what level made the decision to mass produce the defeat device.”