German prosecutors widen VW investigation to include tax evasion


Berlin (dpa) – The emissions cheating crisis that has engulfed German carmaker Volkswagen widened Tuesday after prosecutors launched a tax evasion investigation into company employees as the group admitted that the scandal was larger than previously thought.

Five VW employees are under investigation for tax evasion linked to the embattled carmaker’s admission this month that it had manipulated its carbon dioxide emissions vehicle tests, said Klaus Ziehe, the public prosecutor in the northern German city of Braunschweig, which is near VW’s headquarters in Wolfsburg.

The tax probe widens the Braunschweig prosecutor’s investigation into the VW scandal, which erupted in September when the carmaker admitted it had installed software aimed at cheating on emissions tests around the world on 11 million of its diesel-powered vehicles.

Since then, the company has revealed that there were also carbon-dioxide emissions irregularities affecting up to 800,000 VW cars.

The VW group said Tuesday that cars produced by two of its major brands – the luxury carmaker Audi and sports car group Porsche – also contained the illegal software.

The so-called defeat software has been fitted in Audi, Volkswagen and Porsche models dating back to 2009, or approximately 85,000 cars in the United States, the world’s second-biggest market.

The Braunschweig prosecutor has already launched investigations into several people linked to VW on suspicion of fraud or the possible violation of competition rules.

Ziehe’s new probe combined with the increased number of VW vehicles caught up in the scandal ramps up the pressure on the carmaker, which is already facing a series of hefty fines, costly recalls and legal costs around the world.

At the centre of the prosecutor’s tax investigation is whether taxes on the CO2 vehicles were understated, as a result leading to lower government revenue. Germany’s car tax is based on a vehicle’s fuel consumption.

Investors, however, shrugged off the latest revelations and instead drove the group’s shares up more than 4 per cent in trading on the Frankfurt Stock Market in expectation that the recalls will not result in major conversions to the carmaker’s diesel models.

Some 13,000 Porsche Cayenne models were affected, not 3,000 as assumed previously, a company spokesman said in Stuttgart.

Porsche buys its diesel engines from Audi, which admitted late Monday that engines it manufactured contained the controversial software.

According to Audi, the affected Cayenne models dated back to 2013. Previously, only the model year 2015 had been examined.

Diesel cars are only a sideline of Porsche’s business, as the majority of its customers prefer petrol engines.

However, about a quarter of its Cayenne sports utility vehicles sold in the United States are fitted with diesel engines. Porsche stopped selling the diesel version at the beginning of November.

Porsche said it was fully cooperating with US regulators looking into the case.

Stuttgart-based Porsche said it told US regulators that its 3-litre diesel cars used three software programmes that it had not previously revealed when obtaining regulatory approvals. One of those programmes could be considered to be a “defeat device” under US law.

VW has previously maintained that the emissions scandal was confined to its 2-litre diesel engines, while denying that larger engines manufactured by company Audi were similarly suspect.