The arrest and detention of
Audi's chief executive forces Volkswagen Group's competing stakeholders to renegotiate the delicate balance of power that has helped keep Rupert Stadler in office.
VW) directors are discussing how to run Audi, its more profitable division, following the arrest of the brand's long-time boss on Monday as part of Germany's investigations into the carmaker's emissions cheating scandal.
The discussions risk reigniting tensions
among VW's controlling Piech and Porsche families, its powerful labour representatives and its home region of Lower Saxony. VW has insisted the development of illegal software, also known as "defeat devices" was the work of low level employees, and that no management board members were involved.
US prosecutors have challenged this by indicting
VW's former chief executive Martin Winterkorn. Stadler's arrest raises further questions. Audi and VW said on Monday that Stadler was presumed innocent unless proved otherwise.
Munich prosecutors detained Stadler to prevent him from obstructing a probe into
Audi's emissions cheating, they said on Monday. Stadler is being investigated for suspected fraud and false advertising.
Here are the main players deciding the fate of
Audi. Audi's role in Dieselgate
Volkswagen Group was plunged into
crisis in 2015 after U.S. regulators found Europe's biggest carmaker had equipped cars with software to cheat emissions tests on diesel engines.
The technique of using software to detect a pollution test procedure, and to increase the effectiveness of emissions filters to mask pollution levels during tests, was first developed at
"In designing the defeat device,
VW engineers borrowed the original concept of the dual-mode, emissions cycle-beating software from Audi," VW said in its plea agreement with US authorities in January 2017, in which the company agreed to pay a $4.3 billion fine to reach a settlement with US regulators. Audi engineers developed a 3.0 liter diesel engine which was later also used in VW and Porsche models sold in the United States between 2009 and 2016.
Stadler has denied any involvement in cheating, and
Audi even denied the existence of illegal engine management software after the US Environmental Protection Agency (EPA) issued a notice of violation against Audi on Nov. 2, 2015. Audi eventually admitted to violations on Nov. 19, 2015, according to VW's plea agreement with the US Department of Justice from January 2017.
The deal revealed that
Audi employees were also involved in a cover up once US regulators began asking questions.
VW AG and Audi AG, thousands of documents were deleted by approximately 40 VW and Audi AG employees," VW's plea agreement revealed. Stadler's Backers
In May 2017, Stadler was awarded a five-year contract extension until the end of 2022, but only because of a closed-door pact
among supervisory board members that he would not serve out his full term, two sources close to the company's supervisory board told Reuters at the time.
Stadler has enjoyed backing from the Porsche and Piech families who control Porsche SE, the family's holding company which has a 52 percent stake in
Stadler is close to the families because of his prior role at
VW, where he was chief of staff to Ferdinand Piech, the former chairman and chief executive of VW.
Piech and his cousin Wolfgang Porsche, who currently heads the family clan that controls
VW, are grandchildren of Ferdinand Porsche who developed the iconic VW Beetle. Stadler's Detractors
Stadler's continued presence at the helm of
Audi has been criticised by VW's labour representatives, who have half the seats on the carmaker's supervisory board.
Under pressure to cut costs within the
VW empire in the wake of more than $25 billion in fines and penalties for emissions cheating, labour leaders have called on Stadler to cut costs at Audi and take responsibility for his division's failings. Audi is the most profitable division within the VW group, which also owns the Skoda, Bentley, Bugatti and Porsche brands.
VW supervisory board, or board of directors, grants equal representation to workforce and shareholder representatives.
VW differs from other German companies in one respect - Lower Saxony, where VW is headquartered, gets two of the 10 shareholder seats, tipping the balance of power.
Analysts say the representatives from Lower Saxony and the workforce share the common goal of protecting jobs at the region's biggest company, which employs over 100,000 people in the northwestern German state.
The Porsche and Piech families, controlling 52 percent of the votes in
VW through Porsche SE, have the power to force change at VW, but have largely kept silent over "dieselgate".
The ruling clan encompasses about 80 people with diverse interests and careers ranging from design to real estate, with patriarchs Ferdinand Piech and Wolfgang Porsche being slow to hand the wheel over to their children.
The clan lost its dominant figure at
VW in April 2015 when Ferdinand Piech, who spearheaded its global expansion, quit as chairman after more than two decades at VW's helm following a power struggle with then CEO Martin Winterkorn.
With Piech gone, his cousin Wolfgang Porsche leads the family, which now occupies four seats on the supervisory board.
In 2009, Qatar emerged as aFrustrated with the pace of reform at
VW stakeholder after it helped stabilise Porsche Automobil Holding SE's rocky finances in the wake of the Stuttgart-based company's failed takeover attempt of VW. A portfolio of derivatives on VW shares that Porsche had accumulated was hastily sold to Qatar, which now owns a 17 percent VW stake. VW, Qatar had asked the carmaker for a seat on the company's executive committee in 2016, a request that failed amid substantial opposition. Qatar has two seats on the supervisory board of VW.