FRANKFURT -- Audi CEO Rupert Stadler, who is being held in prison in connection with parent Volkswagen Group's diesel scandal, likely will not return to his post even if he clears his name.
Stadler was taken into custody June 18 by German prosecutors who suspected he was interfering with their investigation. Prosecutors who tapped his phone heard him talking about suspending an employee who was cooperating prosecutors, German press reports said.
Prosecutors have reason to believe Stadler committed fraud and gave false testimony in connection with emissions-cheating, Bavaria's Justice Department said. Stadler, 55, will remain in jail in Augsburg, Germany at least until next week when defense attorneys and investigators have scheduled meetings to allow him to answer questions. .Whether he is then released on bail remains unclear. Wolfgang Hatz, VW Group's former top engineer, won his release on bail of 3 million euros ($3.5 million) this week after spending nine months in custody.
"The expectation is that Stadler cannot return to his post. You have to be careful, because it's not so easy due to German labor laws, but he needs to concentrate on his legal defense right now and clearing his name," said a source close to VW Group's supervisory board.
VW Group insiders say a change in thinking has occurred in the top ranks, and after months of protecting Stadler, he is now seen as damaged goods. “It’s just not conceivable any more, it wouldn’t work,” said one source close to the labor block on the supervisory board.
In the meantime, they say Schot is not behaving like a caretaker CEO, citing the recent decision to relocate the August unveiling of Audi's first purpose-built EV, the e-tron SUV, to the U.S. from Brussels where it is built and was due to debut Aug. 30.
At Schot's insistence the unveiling is likely to take place later in California, home to Tesla, which Audi is targeting with its e-tron range of full-electric cars.
The most elegant solution would be that Stadler is eventually released from custody and volunteers to step down to focus on his legal defense, insiders say. By stepping down willingly, he would save the company the trouble of firing him, a situation no one at the group wants, and Stadler would not be able sue Volkswagen for wrongful dismissal.
Even if Stadler can clear his name, such an outcome will happen too slowly for Audi, which is fighting to keep pace with industry leaders Mercedes-Benz and BMW. One of the key principles of new VW Group CEO Herbert Diess is a significant increase in the speed of decision-making throughout the sprawling company.
It could potentially take weeks or even months before it becomes clear if prosecutors will file charges. Sources say the last thing Audi needs at this point is a lame duck CEO directly implicated in its biggest scandal returning to his old job once he is released from custody.
"Absolutely, no one would disagree with that," said a second source at the group close to senior management. "If Bram Schot does his job well, he has a chance to be the permanent successor. He has all the abilities he needs to act and Schot isn't postponing anything, he's making decisions – de facto he's the CEO."
Schot was chosen above Audi finance chief Alexander Seitz as interim CEO thanks in part to support from VW Group's powerful labor side. They did not want a finance executive who might focus on cutting costs in the post.
Asked whether it was now Schot's job to lose, a third person representing another stakeholder on the supervisory board said that no one was going to oppose him if he does well. "If he does a great job in the next two to three months and really recommends himself for the position, then you cannot all of a sudden tell him he now has to go. It's like in sports: when an interim coach takes over and performs well, he stays."