CHRISTIAAN HETZNER

Stadler's words return to haunt him

Christiaan Hetzner Automotive News Europe's Germany correspondent.Christiaan Hetzner Automotive News Europe's Germany correspondent.
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Audi CEO Rupert Stadler could not have been more prophetic when he said last month: "The diesel crisis is not yet over for us."

Seven days after being named a suspect in an ongoing investigation for the first time, he was taken into custody on Monday by Munich prosecutors and ordered by a judge to remain behind bars until his trial for fraud and false testimony on the suspicion he could destroy evidence.

Stadler, who also is a member of the Volkswagen Group's management board, is now the highest-ranking executive to be arrested in connection with the company’s diesel-emissions scandal.

Today's PR disaster is also a scathing indictment of the stakeholders at Audi, Volkswagen Group and the Porsche and Piech families, who failed to act earlier even as evidence mounted, offices were searched and documents confiscated. By repeatedly backing Stadler throughout the crisis, they now have no one to blame but themselves for their lack of foresight.

"This is an absolute novum," said Rainer Goemmel, professor emeritus of at the University of Regensburg and an expert in economic history.

The only example of a CEO under trial while still in office was Deutsche Bank chief Josef Ackermann more than a decade ago. Yet he was only accused of approving exorbitant bonuses as a non-executive board director of German mobile group Mannesmann during the Vodafone takeover.

"If you look at Mannesmann, the allegations [of misappropriating funds] were of an operating nature and the damage was limited to investors," Goemmel said. "The diesel scandal by comparison is a case of outright fraud that affected thousands of people."

While parent Volkswagen Group emphasized in a statement on Monday that Stadler should be presumed innocent, it seems impossible to imagine how the 55-year-old executive can continue in office. In its statement, parent VW admitted as much, saying its supervisory board would discuss his arrest at a meeting today.

VW has however maneuvered itself into a corner.

Last year, Audi made the extraordinary decision of swapping out five of its seven senior executives, including four all at once in September, and yet Stadler emerged once more unscathed.

As recently as April, Stadler's position was even strengthened by the board when it gave him responsibility for coordinating group sales and distribution in addition to his duties as Audi CEO.

Sacking him at this point might be taken as evidence of his guilt. Putting Stadler on leave, as absurd as that sounds given his arrest, in the hopes of quietly pushing him out the door at a later date remains its best course of action.

Stadler wouldn't likely fight for a severance package – his bank account balance is now the least of his problems.

You can reach Christiaan Hetzner at christiaan.hetzner@gmail.com.

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