By Nicole Encalada, International Business Writer
After the Volkswagen emissions scandal in 2015, German authorities began searching Audi’s German headquarters along with several offices in Ingolstadt as a part of a fraud investigation launched by prosecutors weeks prior. Audi has been placed under investigation in connection with its parent company, Volkswagen, to determine who was responsible for the misconduct.
Both Volkswagen and Audi vehicles with 2-liter diesel engines were the majority of vehicles that were found to be fraudulent in the emissions scandal. Authorities also searched the Audi plant in Neckarsulm as a part of the investigation.
An Audi spokesperson, Mortiz Dreschel, stated that the luxury car company would fully cooperate with authorities because they wish to clear up the situation finally.
Prosecutors said the raids were a part of a criminal investigation concerning Audi’s dishonest conduct in the United States.
In 2015, Volkswagen confessed to programming millions of engines with software that would detect when vehicles would test, and in turn, the emissions controls would turn on. Volkswagen’s corrupt antics resulted in their cars emitting 40 times more than the United States limits of nitrogen oxides, which are not only harmful to the environment but a danger to public health. It was discovered that over 2 million Audi’s used this software in its engine.
The software allowed for the vehicles to pollute in great amounts while being able to evade emission requirements in the United States. The software essentially released a solution that would neutralize nitrogen oxide emissions, making the levels of the pollutant seem acceptable.
More recently, Volkswagen pleaded guilty to the emissions scheme and fraud charges in the U.S. While it was up in the air if the company would be required to pay over $20 billion based on the Justice Department’s sentencing recommendation, Volkswagen agreed to pay $22 billion in penalties and settlements in the United States.
According to the New York Times, there are now six Volkswagen executives facing criminal charges in the U.S. In Europe; there are far more senior executives who are currently under investigation. However, prosecutors in Munich have not released identities of any specific suspects.
A former Audi engineer even came forward to claim he was unlawfully fired after claiming he had been told to use the crooked software by upper management. Audi ferociously rejected these accusations claiming that it was false information. The company insisted that top managers were unaware of any wrongdoing.
The investigation could potentially damage much of Audi’s profits and ultimately, Volkswagen’s profits as well. With Audi making up a great portion of its parent company’s revenue, any further damage to the Audi name could result in negative consequences. According to reports, models such as Audi’s A8 luxury sedan and the Q7 SUV made up 15 percent of vehicles sold by Volkswagen in 2016. Audi generated a third of the Volkswagen’s $15.5 billion in operation profit.
To Audi’s dismay, the raids could already be somewhat damaging to their image as they began on Wednesday, coincidentally when the company held its annual news conference. During the conference, there was many questions about the investigation and raids in Ingolstadt, Germany. Rupert Stadler, Audi CEO, repeatedly insisted that the fraud was to blame on lower-ranking employees and the company’s management was unaware of the fraud.
As of now, investigators in Munich and Braunschweig are both looking for any evidence suggesting criminal behavior as well as any violations by either Audi or Volkswagen. However, both companies are subject to different penalties as their each companys is headquartered in a different German jurisdiction.
A version of this article appeared in the Tuesday, March 21st print edition.
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