Former VW boss Winterkorn investigated for fraud

[BERLIN] German prosecutors launched an investigation on Monday into former Volkswagen boss Martin Winterkorn over the rigging of vehicle emissions tests, as the carmaker suspended three top engineers in an attempt to tackle the crisis.

The investigation into Winterkorn, who quit on Wednesday after almost nine years at the helm of Europe's largest carmaker, is into "allegations of fraud in the sale of cars with manipulated emissions data," the prosecutor's office said.

Volkswagen, which has admitted to cheating diesel emissions tests in the United States, is under huge pressure to get to grips with the biggest business scandal in its 78-year history.

It named company veteran Matthias Mueller on Friday as chief executive and agreed to appoint a US law firm to conduct a full investigation.

Sources familiar with the matter said on Monday it had also suspended the heads of research and development at its core VW brand, luxury division Audi and sports car maker Porsche.

But the crisis shows no sign of dying down.

Two German newspapers said on Sunday Volkswagen's own staff and one of its suppliers had warned years ago about the illegal use of so-called "defeat devices" to detect when a car was being tested and alter the running of its diesel engine to conceal their emissions of toxic nitrogen oxides.

Environmental campaign group Transport & Environment (T&E) published new data on Monday showing that some new Mercedes , BMW and Peugeot cars use 50 per cent more fuel than laboratory tests show, saying this was evidence of a wider industry problem.

T&E, which works closely with the European Commission, said its data did not prove other firms were using defeat devices.

But it said the gap between lab results and road performance had grown to such an extent for emissions of both carbon dioxide and nitrogen oxides that further investigation was needed to discover what carmakers were doing to mask emissions. "The Volkswagen scandal was just the tip of the iceberg,"said Greg Archer, clean vehicles manager at T&E, adding the gap between lab tests and real-world performance cost a typical driver 450 euros (US$504) per year.

ACEA, the European Automobile Manufacturers' Association, which represents top carmakers, has said there is no evidence the use of defeat devices is an industry-wide issue.

In a statement on Monday, it said it supported the development of updated testing.

US and European regulators have said they are working on tighter rules.

Volkswagen shares have plunged about 35 per cent since it admitted to cheating US emissions tests, wiping more than 25 billion euros from its market value. It faces investigations and potential fines from regulators and prosecutors, as well as lawsuits from cheated customers.

The crisis is an embarrassment for Germany, which has for years held up Volkswagen as a model of the country's engineering prowess and has lobbied against some attempts to tighten regulations on automakers.

The German car industry employs more than 750,000 people and is a major source of export income.

REUTERS