‘Fewer than 10’ targeted in VW probe: prosecutors – Daimler compliance manager to help tackle scandal

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FRANKFURT, Oct 16, (Agencies): German prosecutors said Friday they had identified fewer than 10 suspects in the massive pollution-cheating scandal that has engulfed Volkswagen, as the auto giant announced a drop in worldwide sales.

“More than two, but a lot fewer than 10 people” were suspected of masterminding the scam where sophisticated software skews pollution emissions tests in diesel engines, Klaus Ziehe, spokesman for the prosecutors, told AFP.

After VW admitted last month to fitting 11 million vehicles worldwide with the rogue devices, plunging the world’s biggest automaker by sales into an unprecedented crisis, the prosecutors in the northern city of Brunswick near VW’s headquarters launched a criminal investigation into suspected fraud.

Earlier this week, news weekly Der Spiegel reported that “at least 30 people” were involved in the deception — a number that VW dismissed as “completely without basis”.

The group’s new chief executive, Matthias Mueller, said last week that four employees, including three executives in charge of engine development at different stages, had been suspended.

German press reports named two of them as Ulrich Hackenberg, development chief at VW’s Audi subsidiary, and Wolfgang Hatz, his counterpart at luxury sports car brand Porsche. Volkswagen has not confirmed that information.

In addition to the German criminal probe, VW is conducting its own internal investigation and has hired a US law firm to help.

At the same time, Volkswagen said deliveries to customers were down for both September and the first nine months of this year.

VW said it sold 885,300 vehicles worldwide in September and 7.431 million in the first nine months. Both figures represented a decline of 1.5 percent compared with the corresponding period a year earlier.

From a regional breakdown of the sales figures, it was not immediately apparent whether the scandal, which broke on September 18, has had any direct effect on business just yet.

European sales in fact advanced by 3.8 percent in September, and sales in Germany were up 1.5 percent, VW said.

North American sales were up six percent in September, despite the fact it was US regulatory authorities who set the ball rolling, accusing VW of fitting its diesel engines with the cheating software.

By contrast, sales in Brazil, Russia and China — whose slowing economies are causing headaches not just for VW, but for other carmakers as well — fell by 43.7 percent, 26 percent and 0.8 percent, respectively.

The revelations about VW’s manipulation of its diesel engines have sparked one of the biggest scandals in the history of the automobile sector.

In addition to the costs of repairing so many vehicles, the once-respected automaker now faces billions of euros (dollars) in potential fines and legal costs, aside from the incalculable fallout from lost sales and diminished customer trust.

VW is facing legal probes in a number of countries, not just the United States and Germany. On Thursday, the German federal transport authority KBA said it would order VW to recall 2.4 million vehicles in Germany alone, starting from January 2016.

The carmaker responded by saying it would recall 8.5 million vehicles across all 28 EU member states.

In Italy police Thursday raided VW’s main office in Italy, as well as those of its sports car subsidiary Lamborghini.

And on Friday Italian business raised concerns for the country’s auto parts manufacturers, and the Bank of Italy said in its monthly bulletin that the VW crisis adds “a new element of uncertainty for European economies,” with repercussions “still difficult to evaluate”.

As it seeks to contain the crisis, VW announced it had named a top executive from rival carmaker Daimler as its new board member in charge of integrity and legal affairs from Jan 1.

VW said its supervisory board chief Hans Dieter Poetsch, had asked his counterpart at Daimler, Manfred Bischoff, to release Christine Hohmann-Dennhardt from her contract at Daimler early.

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FRANKFURT: Volkswagen named Daimler manager Christine Hohmann-Dennhardt on Friday to the newly created post of board member for integrity and legal affairs, as it strives to recover from the scandal over its cheating of diesel emissions tests.

Europe’s biggest carmaker said Hohmann-Dennhardt, who has held the same position at German rival Daimler since 2011, would start her new job on Jan 1, 2016.

VW also said group sales fell 1.5 percent in September from the same month last year. That marked an improvement from a 5.4 percent drop in August and would have seen little impact from the test-cheating scandal, which only came to light in the second half of September.

VW admitted on Sept 18 it used illegal software to manipulate emissions tests on diesel vehicles in the United States, sparking the biggest business crisis in its history. The admission has wiped about a quarter off its stock market value, forced out its long-time chief executive and sparked investigations and lawsuits across the world.

Daimler said it had agreed to release Hohmann-Dennhardt from her contract early.

“Daimler is helping VW build rebuild trust in the German car industry,” said Ferdinand Dudenhoeffer, head of the Center of Automotive Research at the University of Duisburg-Essen.

“It’s an important step to help VW clean up the affair.”

Though VW has recruited outsiders to senior jobs before, it has a strong tradition of promoting from within and has come under fire from some investors for appointing company veterans as its new CEO and chairman in the wake of the test-cheating scandal.

Before joining Daimler, Hohmann-Dennhardt, 65, was a judge of the federal constitutional court. Prior to that, she held position in the German state of Hesse including minister of science and the arts and minister of justice.

Earlier on Friday, VW promoted Lars-Henner Santelmann to be the new head of its finance arm, Volkswagen Financial Services.

Santelmann, who joined VW in 1988, succeeds Frank Witter who was recently appointed as VW’s new chief financial officer.

Breaking down its September sales figures, VW said group sales rose 4.7 percent in western Europe and 7.3 percent in the United States, offset by a 0.8 percent decline in China, a 26 percent drop in Russia and a 44 percent plunge in Brazil.

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