June 12, 2018 / 2:54 PM / a year ago

VW board to discuss prosecutors' probe into Audi CEO on Monday

HAMBURG/BERLIN, June 12 (Reuters) - Volkswagen's supervisory board will on Monday discuss German prosecutors' investigation into the head of its Audi brand, as the carmaker weighs up how to tackle the latest fallout from its 2015 emissions scandal, sources said.

Munich prosecutors said on Monday Audi Chief Executive Rupert Stadler and another member of Audi's top management were being investigated for suspected fraud and false advertising and had their apartments searched.

Stadler has been under fire since Audi admitted in November 2015 - two months after Volkswagen - that it used illegal software to cheat U.S. emissions tests on diesel engines.

The 55-year-old has held onto his post mainly thanks to the backing from members of Volkswagen's (VW) controlling Porsche-Piech families.

VW's supervisory board, which includes representatives of the ruling families, labour leaders, shareholders and officials from the group's home state of Lower Saxony, want to hear from the carmaker's lawyers what evidence the prosecutors have against Stadler, sources close to VW said on Tuesday.

Next Monday's board meeting was arranged a while ago and was not triggered by this week's move by the prosecutors to widen their probe into Audi, one source said.

News of the probe has come just as VW's new group CEO Herbert Diess is trying to introduce a new leadership structure and speed up the group's costly shift towards electric vehicles in the wake of its emissions scandal.

But recurring problems at Audi, the group's main profit engine, continue to pose distractions. Last month, the Ingolstadt-based luxury brand said it had discovered emissions-related problems with a further 60,000 cars.

An expert committee set up by VW's supervisory board in 2015 to lead internal investigations is due on Monday to brief the 20-strong board on its progress, another source said.

Munich prosecutors accuse Stadler of taking no action in late 2015 to stop deliveries of manipulated Audi models in Europe, a person familiar with the matter said. Stadler could not be reached for comment.

A source close to VW's supervisory board said support for Stadler from the Porsche and Piech families could dwindle if the probe found strong evidence of wrongdoing against him. For the time being, however, the families were still backing Stadler, he added.

Before becoming Audi CEO in 2007, Stadler was a confidant of, and former assistant to, then-VW chairman Ferdinand Piech, the scion of the group's controlling clan. (Reporting by Jan Schwartz, Andreas Cremer, Irene Preisinger and Joern Poltz; Editing by Mark Potter)

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