Audi, "The Mother Of All Dieselgate Cheating," Keeps Its Oblivious CEO Rupert Stadler

Last Wednesday, Audi CEO Rupert Stadler was interrogated by investigators of the Jones Day lawfirm, who showed great interest in his involvement with Volkswagen’s dieselgate scandal.What transpired on the hot seat depends on who you ask. Some claim the interview produced a lot of nothing. Some say that Stadler was confronted with new accusations. Then there is that long-term Volkswagen executive who tells me that Stadler could be the lynchpin of present and past Volkswagen scandals and that no-one in Volkswagen’s leadership would have any interest in Stadler becoming talkative.

Two days after Wednesday’s highly confidential grilling, Reuters had three sources claiming that the fishing expedition ended without a bite. A source close to Volkswagen’s notoriously leaky supervisor board told the wire that "nothing burdensome against Stadler was found.” Two sources close to Audi corroborated the story. Of course, that doesn’t prove Stadler's innocence. One might recall that late last year, Stadler let his spokesfolk vehemently deny the existence of any defeat devices in Audi's 3-liter diesel engines, only to admit to it a month later.

The all clear signal leaked to the media provided the expected headlines, but it did not register with Germany’s Spiegel Magazin. The usually well-informed outlet talked to other insiders at Volkswagen who reported that during the questioning, Audi’s CEO became the target of “fresh accusations.” Stadler had to listen to reproaches of having withheld important documents during a presentation in the U.S., Spiegel’s sources say. The lack of speedy contrition supposedly is what is keeping the Environmental Protection Agency (EPA) from approving a fix of 85,000 cars with Audi’s dieselgate-affected 3 liter diesel engines.

Volkswagen’s supervisory board met yesterday, and from what the “well-informed circles” tell German media, Stadler still is in charge of Audi. It could be in Volkswagen’s best interest that he keeps his job for a long time.

“Don’t forget that Stadler was Dr. Piech’s General Secretary,” admonishes me an executive high up Volkswagen’s food chain. “Stadler and Piech are a two-person mutual aid and protection society. Nobody knows more about the darkest secrets of Volkswagen than those two. There are people who say that if Stadler would start talking, Volkswagen would collapse like the proverbial house of cards. Lopez, GM sourcing data, prostitutes for labor leaders, Pischetsrieder, Bernhardt, Porsche takeover, CO2, the list of skeletons in their closet is long.”

Indeed, Stadler, a native of Titting, Bavaria, headed the Board of Management's Office for the Volkswagen Group during Piech’s reign as CEO, and anything the boss should have and better should not have known crossed Stadler’s desk. After Piech gave up the CEO post, only to continue as chief string-puller as chairman of Volkswagen’s supervisory board, his trusted secretary was elevated to the CFO role of Audi. Four years later, Stadler became CEO of Audi in 2007, a promotion that caused raised eyebrows all around the Volkswagen empire.

“At the time, a Volkswagen brand run by anyone else than an engineer was unthinkable,” says my Wolfsburg conversation partner, “Stadler was the only exception, a bean counter in charge of Fortschritt durch Technik, of all things.”

When it comes to dieselgate, an unsuspecting and utterly oblivious Stadler seems as likely as Santa Claus announcing his impending nuptials with the tooth fairy. Last year, Audi’s R&D chief Ulrich “Hacki” Hackenberg left under a black dieselgate cloud, nine months later, his successor Stefan Knirsch suffered the same fate. Both were Audi board members, operating under and reporting to Stadler, and we are led to believe that the watchful eye suddenly developed incurable cataracts?

On Wednesday, the day Stadler was said to have professed his innocence to Jones Day, incriminating material collected by the same law firm was leaked to investigative reporters of Sueddeutsche Zeitung and two German public TV stations. As early as 2007, said Sueddeutsche, an Audi engineer wrote an email to “a large circle of managers of the automaker,” stating that “without cheating” the strict U.S. rules for hazardous nitrous oxides could not be met. Actually, the engineer used the robust language common in Bavaria, and wrote that he could not comply with rules “ohne Bescheissen,” literally “without shitting” the regulator. Neither Audi nor Volkswagen have a comment to these allegations, conveniently citing ongoing proceedings in the U.S. and elsewhere.

As noted above, Stadler became CEO of Audi in 2007, the same year the damning email was said to be written to the large circle of managers. Already, Audi is called the “mother of all dieselgate cheating” in German media. There are new reports that four leading powertrain developers were suspended at Audi, and that it was Audi engineers who had the idea of beating the emission tests with a little engine computer trickery. All the while, Stadler proclaims his innocence, while his supposed supervisors leak with a firehose that nothing untoward can be found.

In the auto industry, and for decades, tougher and tougher emission targets around the world have been a core strategic challenge. Suddenly, a monster of an engineering and financial problem can be solved with a few lines of code, and we are asked to believe that the boss had no idea how the miracle was performed? A CEO who does not care how the industry’s core conundrum can be solved should be fired. A former CFO who is unaware that his engineers found a no cost solution to one of the industry’s most pressing problems should be retired in disgrace.

Actually, to end the steady drip of bad news, and to give Volkswagen a new start into as better future, “everybody who during and before diesel gate was CEO, R&D chief, or head of Quality Assurance of any and all Volkswagen Group brands needs to go, and I mean all,” opines the man on the other end of a crackling line from Wolfsburg, and he wishes me a pleasant weekend.