A labor tribunal heard at the regional court Stuttgart will present information claiming that Audi chairman Rupert Stadler knew more than he claimed about emissions manipulations at the luxury car maker, Handelsblatt has learned. The documents related to the case also suggest that Mr. Stadler misled U.S. environmental regulators about how much he knew about cheat software.
The case that contains the explosive evidence has been bought by a former Audi manager, who had been was responsible for the development of diesel engines. He was suspended by Audi at the end of 2015 over the emissions scandal and is suing to get his job back.
The accusations, detailed in an attorneys' statement submitted to the state labor court in Stuttgart, date back to meetings Audi held in the United States in November 2015. On November 18 2015, Mr. Stadler and a group of executives were in the United States, having flown in to attend a meeting in Ann Arbor, Michigan, where Audi was scheduled to answer questions by the Environmental Protection Agency, or EPA, the next day. They were well aware of the potentially explosive nature of the meeting. Two months earlier, the EPA had found Audi parent company VW guilty of emissions fraud in millions of cases, a scandal that cost Martin Winterkorn his job as chief executive of VW and chairman of the Audi supervisory board.
On that November day, Audi was also under suspicion. The EPA had accused the VW subsidiary, like its parent company, of having installed so-called "defeat devices" in the electronic control unit of three-liter diesel engines. According to the EPA, the software, installed in 85,000 cars, was intended to conceal the fact that too little urea was being injected into the engine. Urea neutralizes harmful nitrogen oxide.
At that point in mid-November, Mr. Stadler had already admitted to the existence of the software. However, Audi argued, the company had merely neglected to report this information and had absolutely no intention of deceiving the U.S. authorities. But now individuals who attended the November 18 meeting have told Handelsblatt that it was already clear at the time that Audi had also engaged in deception, just as the EPA had accused the German automaker.
Mr. Stadler, who has been head of Audi for a decade, insists he only learned of the software a few days before the meeting with the EPA
What is more, a presentation prepared for the meeting with the EPA, which would have made it clear that fraud had occurred, ended up being watered down before it was presented. According to the charges, Mr. Stadler was partly responsible for Audi continuing to cover up the problem.
Audi denies the accusations of wrongdoing. It said in a statement that "The Jones Day law firm has addressed this issue in extensive interviews and investigations. As far as our company is concerned, all unanswered questions are now resolved. Aside from that, we have no comment on the statement of facts."
Mr. Stadler is not listed as a defendant in the statement from the U.S. Department of Justice. Audi officials say that Jones Day, after an intense investigation, exonerated Mr. Stadler. However, the final report is not available to the public.
Mr. Stadler, who has been head of Audi for a decade, insists he only learned of the software a few days before the meeting with the EPA. Although he was not required to appear in person before the EPA, he declared the meeting a top priority, saying that he had joined the group flying to the United States to ensure that the investigation would move forward.
As Handelsblatt has learned, Mr. Stadler and a handful of attorneys and executives worked on their presentation at the November 18 meeting in Ann Arbor until into the previous evening. Another member of the group was a senior VW manager sent by VW Group Chief Executive Officer Matthias Müller as an investigator. Both men, Mr. Stadler and the VW manager, were reportedly present throughout the entire meeting. Technical details were apparently discussed, a strategy was established for the day and the group agreed on the details of the presentation.
But the presentation, which was on the table in the morning and exposed the scandal, looked very different in the evening. In the original version of the presentation, it was apparently clear that the Audi engines exceeded emissions thresholds during operation on the road, because of the software-controlled reduction in Adblue, a urea solution that reduces nitrogen oxide emissions. In this way, the manufacturer was saving the customer a trip to the gas station and fulfilling the official requirement that Adblue could only be added every 16,000 kilometers. The Audi fuel tanks were much too small for the mixture. This detail was completely absent in the final version
But precisely that information would have enabled the EPA representatives to immediately recognize that the Audi engines were violating the emissions rules.
The Munich II public prosecutor's office has been examining the Audi file for about a year now but has yet to reach a conclusion. Unlike prosecutors in Braunschweig, who now have a list of 37 individuals suspected of fraud – including former VW CEO Martin Winterkorn – the investigation in Munich is still in its preliminary stages.
Insiders report that the investigators are having trouble with complex technical and organizational issues, and that their investigation is complicated by the fact that Audi has received support from the Federal Motor Transport Authority or KBA. Audi managed to convince the KBA that at least certain forms of Adblue limitation were intended to protect the engine. It is questionable how much weight the KBA's opinion carries, but the fact is that its involvement is one of the reasons why the public prosecutor's office is having trouble justifying an initial suspicion against certain individuals. However, the U.S. authorities Statement of Facts apparently provided the officials with valuable new information.
However, one thing is clear: The U.S. officials did not receive a complete portrayal of Audi's activities on November 19, 2015. Audi later had to admit that it had not "adequately described and declared" the defeat devices to the U.S. authorities, even though the regulations leave little doubt as to Audi's reporting obligation. In the spring of 2016, it was also revealed that Audi engineers had developed the software used to manipulate emissions values throughout the entire VW Group. Audi also had to admit that the urea tanks in its 3-liter engines were too small from the start.
Jan Keuchel is a Handelsblatt correspondent covering investigations and the German legal system. Markus Fasse currently specializes in aviation and automobile industry news. Volker Votsmeier is an editor with Handelsblatt's investigative reporting team. To contact the authors: [email protected], [email protected] and [email protected]