VOLKSWAGEN was supposed to turn the corner this year from a costly diesel-emissions scandal, with a new emphasis on electric vehicles, a new logo and a pledge to act ethically.
But on Tuesday, German prosecutors charged the automaker's two highest-ranking executives with stock market manipulation; they had failed to inform shareholders of an investigation in the United States that led to its conviction for emissions cheating.
The allegations against Hans Dieter Pötsch, chairman of Volkswagen's supervisory board, and Herbert Diess, chief executive, mean that the world's largest automaker will be led by criminal defendants as it tries to recast itself as a climate-friendly manufacturer of affordable electric cars.
The prosecutors also charged ex-CEO Martin Winterkorn.
The day brought bad news for another German automaker, too, again tied to an emissions scandal. Daimler, the maker of Mercedes-Benz cars, agreed to pay a fine of 870 million euros (S$1.3 billion) in Germany for selling diesel cars that polluted more than allowed. The company has disclosed that it is also under investigation in the United States.
The legal actions were a further setback to the German car industry, already struggling with falling sales and a transition to electric vehicles.
At Volkswagen, Mr Pötsch and Mr Diess indicated that they would stay in their jobs; no moves appear to have been made by the company's supervisory board or its largest shareholder to oust either of them.
Both men, who could be jailed up to five years, deny the charges against them, as did Mr Winterkorn.
Mr Pötsch, who was chief financial officer of Volkswagen throughout the period when the company was installing illegal emissions cheating software in millions of vehicles, is a close confidant of the Porsche and Piëch families, which own a majority of Volkswagen's voting shares. Volkswagen's other major shareholder is the German state of Lower Saxony, which owns 20 per cent of the voting stock. Outside shareholders, heavily outnumbered, have little influence.
The case could have financial consequences for Volkswagen. Shareholders have sued, seeking damages that could reach US$10 billion. At issue is when the Volkswagen executives knew the company was under probe in the US for deploying software that produced artificially low emissions in diesel cars when they were being tested. NYTIMES