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German Prosecutors Tighten the Screws on Ex-VW CEO Winterkorn

Former Volkswagen AG Chief Executive Officer Martin Winterkorn Appears Before German Parliamentary CommitteFormer Volkswagen AG Chief Executive Officer Martin Winterkorn Appears Before German Parliamentary Committe
Left to right, Kersten von Schenck, lawyer, Martin Winterkorn, the former chief executive officer of Volkswagen AG, Gerwin Postel, in-house lawyer at Volkswagen AG, and Robert Unger, lawyer, arrive to testify to a parliamentary committee in the Bundestag in Berlin.Bloomberg Bloomberg via Getty Images

Former Volkswagen Chief Executive Martin Winterkorn may have known sooner than he has admitted that the carmaker was cheating on emissions tests, German prosecutors said on Friday, as they widened an investigation into the scandal.

VW’s acknowledgement in September 2015 that it had used software to manipulate emissions erased billions of euros from its market value, forced Winterkorn’s resignation and sparked investigations and lawsuits across the world.

(To read Fortune’s in-depth account of the Volkswagen emissions scandal, click here.)

VW has said its executive board did not learn of the software violations until late August 2015 and formally reported the cheating to U.S. authorities in early September that year, and Winterkorn dismissed last week recurring reports that he knew about the cheating sooner.

Prosecutors in Braunschweig near Volkswagen’s (VW) Wolfsburg base said Friday they had searched 28 homes and offices in connection with their investigation this week and had increased the number of people accused in connection with the emissions scandal to 37 from 21, including Winterkorn.

 

“Sufficient indications have resulted from the investigation, particularly the questioning of witnesses and suspects as well as the analysis of seized data, that the accused (Winterkorn) may have known about the manipulating software and its effects sooner than he has said publicly,” they said in a statement.

Winterkorn and VW brand chief Herbert Diess have already been subject of an investigation by Braunschweig prosecutors over suspicions of possible market manipulation. Prosecutors are now also probing the former CEO on suspicion of fraud.

The widening of the investigation will add to the carmaker’s legal headaches and be grist to the mill of investors seeking 8.8 billion euros ($9.41 billion) in damage claims for the collapse of VW’s share price after the scandal broke.

The naming of Winterkorn brings the investigation a step closer to Hans Dieter Pötsch, who was chief financial officer at the time, but who has since been promoted to head VW’s supervisory board.

Winterkorn denied any wrongdoing when he quit on Sept. 23, 2015, but said he was clearing the way for a fresh start at VW with his resignation. Winterkorn ran the German group for more than eight years, ending his time as Germany’s highest-paid CEO. He has subsequently retired, keeping his full pension rights, a fact that has rankled with a workforce that VW now intends to shrink by 30,000 as a result of the scandal.

Earlier this week, VW said that the woman it hired to help clean up the company’s culture after the scandal, Christine Hohmann-Dennhardt, had quit after just a year, following a disagreement with the board. The report revived suspicions that VW would not follow through with its promise of a thorough and unsparing investigation into the scandal.

Hohmann-Dennhardt, a former judge with Germany’s highest court, had reportedly had difficult relations with VW’s head of legal affairs, Manfred Döss, whom the Financial Times reported had been brought in partly to “prevent her from putting her fingers into too many holes (and) stirring up too much.”