Audi CEO Rupert Stadler arrested in Germany over Volkswagen diesel scandal

In May, a federal grand jury in Detroit indicted Winterkorn on charges stemming from the diesel emissions cheating scandal in a plot that prosecutors allege reached the top of the world's largest automaker.

German news agency dpa reported that prosecutors chose to seek Stadler's arrest due to fears he might try to evade justice.

"His arrest is another low point in VW's diesel saga", said Evercore ISI analysts, who have criticized the company for being slow to reform.

Stadler's detention follows a search last week of his private residence, ordered by Munich prosecutors investigating the manager on suspicion of fraud and indirect improprieties with documents. Confirming the development, a spokesperson said: "We confirm that Mr Stadler was arrested this morning".

The arrest of the Audi CEO comes just weeks after Volkswagen tapped a new CEO to move the company past the scandal.

Audi and VW confirmed the arrest and reiterated Stadler was presumed innocent unless proved otherwise. "The hearing to determine whether he will be remanded is ongoing", the spokesman stated while also adding that the presumption of innocence applied to Stadler's case.

Former VW chief executive Martin Winterkorn stepped down soon after the scandal broke in September 2015, while successor Matthias Mueller was hastily replaced earlier this year.

Stadler's arrest will raise tensions on VW's supervisory board, putting at risk a fragile truce between management, labour representatives and board members from the carmaker's home region of Lower Saxony.

VW has so far set aside around $30 billion to cover the cost of fines, vehicle refits and lawsuits related to its emissions test cheating.

Standler's home was raided last week where Munich prosecutors based the arrest warrant on concealment of evidence. Two managers are serving prison terms in the US.

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