German prosecutors launch probe into ex-VW chief as scandal widens

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German prosecutors said Monday they had launched a fraud investigation into former Volkswagen chief Martin Winterkorn as the company’s emissions scandal widened.

The announcement by prosecutors in the city of Braunschweig followed the admission by the group’s luxury offshoot Audi that 2.1 million of its vehicles worldwide had been hit by the emissions testing scandal that has engulfed the company.

The focus of the prosecutors’ investigation is whether fraud was involved in the selling of VW diesel-powered vehicles that had been fitted with software designed to cheat on exhaust tests.

Shares in embattled German carmaker fell sharply again on Monday amid investors’ concerns about the fallout from the scandal that broke over a week ago in the US.

Software designed to circumvent emissions tests had been installed in a series of Audi’s diesel-powered models, including its sports car IT brand and two of its SUV brands.

VW last week admitted that it had equipped about 11 million of its diesel-powered cars around the world with the illegal software.

After a plunge in VW stock last week wiped more than a third off the company’s value, shares in Europe’s biggest carmaker tumbled a further 6.5 per cent in early Monday trading on the Frankfurt Stock Market.

Volkswagen new chief Matthias Mueller, who was appointed on Friday to take charge of rebuilding global confidence in the company, wrote to the group’s 600,000 employees promising a full and open inquiry into the scandal, Germany’s business daily Handelsblatt reported Sunday.

But worries about the implications of the scandal for other German auto groups have also dragged down shares in other major car manufacturers.

Shares in the world’s leading luxury carmaker BMW and Daimler – the manufacturer of Mercedes Benz saloons – fell more than 3 per cent in Frankfurt trading Monday.

Shares in German tyre maker Continental were also hit and were trading down by 3.4 per cent.

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