German police arrested and detained a man Thursday who had previously been one of Volkswagen Group’s (VLKAY, -0.07%) highest-ranking engineers, over his role in the company’s diesel emissions scandal.
Wolfgang Hatz had been head of engine development at Audi between 2001 and 2007, a period that spans the dates when engineers across the group had started to use illegal software to mask the true level of harmful emissions generated by their cars. From 2011, Hatz had been head of research and development at Porsche, another unit of VW. He had been suspended along with two other senior executives shortly after the deception was made public by U.S. authorities in September 2015 and left Porsche by mutual consent in 2016.
Hatz is the most senior executive to be arrested to date in connection with the scandal, despite widespread suspicions that management at the very top were also aware of the issue well before it became public, The news of Hatz’s arrest was first reported by the German paper Sueddeutsche Zeitung reported.
Volkswagen has agreed to pay over $24 billion in penalties to U.S. authorities to settle and remedy charges that it deceived regulators, dealers and customers. However, it has largely escaped penalties in Europe, where it sold nearly 20 times as many ‘dirty diesels’ over the last decade. That’s because EU law has more loopholes that allow VW to argue that its software and its marketing claims were, technically, legal.
Separately, Volkswagen announced Friday it would take a new charge of 2.5 billion euros ($2.95 billion), saying that the technical fixes that it had agreed to in the U.S. for its 2-liter cars were proving more expensive than it had reckoned.
Volkswagen’s shares were the worst performers in Germany’s benchmark DAX index Friday, falling 2.7% in early trading.