VW Names Schot as Interim Audi Chief After Stadler Arrest

(Bloomberg) -- Volkswagen AG picked Bram Schot as interim chief at its Audi unit, taking nearly two days to decide after being caught wrong-footed by the surprise arrest of longtime leader Rupert Stadler over his role in the diesel-emissions scandal.

VW Names Schot as Interim Audi Chief After Stadler Arrest

The decision elevates an executive so far untainted by the slow-motion scandal that continues to burn almost three years after the company admitted to rigging emissions test.

Audi accepted a request by Stadler, who remains in custody pending questioning, “to release him from his duties,” according to a statement Tuesday.

The deferential wording contrasts with an executive reshuffle in September, which Schot was also part of, that ousted four out of seven management board members without explaining their shortcomings.

The drawn-out manner of Stadler’s suspension also underscores the struggles the company faces to finally draw a line under the crisis. Volkswagen has stood by Stadler, even as allegations over his role in the scandal started to build within weeks of it becoming public in September 2015. Leading to his arrest was an intercepted phone conversation that led prosecutors to conclude he tried to influence witnesses, a person familiar with the situation said earlier.

“Volkswagen has chosen a strategy of a careful clean-up, and keeping a degree of control over the process, that has left in place many of the people who held important positions during the diesel cheating,” said Stefan Bratzel, director of the Center of Automotive Management in Bergisch Gladbach, Germany. “The disadvantage of that is a company only very slowly moving out of the crisis.”

Schot, 56, joined the parent organization from Daimler AG in 2011 and has held roles in its commercial vehicles unit. His appointment applied “temporarily, until the circumstances that led” to Stadlers arrest have been clarified, according to the statement.

The detention, the most high-profile in the saga so far, raises doubts about the much-promised cultural shift in the upper ranks of a company known for top-down management in an insular culture centered around purpose-built car town Wolfsburg. Throughout the crisis, Volkswagen rejected claims that top executives including Stadler were aware of the criminal scheme that stretched over almost a decade.

Volkswagen declined 3 percent to 151.40 euros, and traded 2.6 percent lower at 2:19 p.m. in local trading, making it the second-worst performer on Germany DAX Index.

Complex Structure

VW board decision can be cumbersome due to a complex shareholder structure that limits influence from outsiders. The Porsche and Piech families control a majority stake, but have limited sway as Lower Saxony and worker representatives can veto strategic decisions.

The families also place a high premium on loyalty, which explains why Stadler hung on for so long even as he was named a suspect in the prosecutor probe last week. A top assistant to former VW Chairman Ferdinand Piech, he was placed in charge of Audi in 2007. In addition to being a profit driver, Audi provides technology and engines to a number of the group’s brands, including Porsche.

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