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German Prosecutors Expand the List of Suspects at VW

A Volkswagen dealership.A Volkswagen dealership.
A Volkswagen dealership.Photograph by Julian Stratenschulte—AFP/Getty Images

German prosecutors have widened their investigation into potentially criminal activity at Volkswagen AG (VLKAY) to 17 members of staff—but still aren’t investigating either its present or its past top management.

A spokesman for the prosecutors in the city of Brunswick (Braunschweig) told Fortune that recent disclosures suggesting that chief executive Martin Winterkorn was aware of the long-running deception of U.S. regulators already in May 2014—over a year before the company finally admitted it to the world—weren’t enough by themselves to justify opening an investigation into the former boss.

Winterkorn had resigned in September, barely a week after the Environmental Protection Agency put the scandal in the public domain by issuing a “notice of violation” to VW and threatening it with billions of dollars in fines. (Click here for Fortune’s in-depth analysis of the scandal’s origins and consequences.) The prosecutors had initially said they were investigating Winterkorn but subsequently withdrew their statement, which went against VW’s and Winterkorn’s claims that he had known nothing about the deception.

VW had issued a statement last week confirming that Winterkorn had received an e-mail from an internal crisis manager warning of the crisis in his “extensive weekend mail” in May 2014, but said it wasn’t clear whether he had read the e-mail. Shareholders suing VW say this is proof that the company criminally delayed releasing information that wiped billions of euros off the company’s valuation when it was finally released. VW rejects this argument, saying that the matter only assumed the dimensions to warrant a stock exchange release when the EPA published its notice of violation.

 

“Until then, there were no indications whatsoever of information with relevance for the stock price, since up until that point in time it was expected that a manageable number of vehicles (approximately 500,000) would be affected by the diesel matter and that fines in a two-digit or lower three-digit million amount would be imposed, as had been the case in the past in the U.S. in comparable cases involving passenger vehicles,” VW said.

There was more bad news for VW elsewhere Tuesday, as thousands of workers gathered for an update from management at the company’s vast headquarters in Wolfsburg.

Matthias Müller, who succeeded Winterkorn as CEO, warned that the scandal will inflict “substantial and painful” damage on the company, while Stephan Weil, the Governor of VW’s second-largest shareholder, the German state of Lower Saxony, said it expects more “unpleasant news” to emerge from an emissions-test rigging scandal.

“We will this year probably every now and then be confronted with unpleasant news related to dieselgate,” Stephan Weil told the meeting.

Weil said that the company should be able to cope with the fallout of its manipulation but that the damage will not be small. Lower Saxony, which holds 20% of VW’s common shares, has “no reason” to alter its commitment to the carmaker, Weil said.

Reuters contributed to this report.