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Germany Investigates VW’s Ex-boss over Fraud Allegations

German prosecutors launched an investigation on Monday into fraud allegations against former Volkswagen boss , showing their determination to get quickly to the bottom of a scandal over rigged emissions tests that has rocked the global car industry.

The German company also suspended three top engineers, sources familiar with the matter told Reuters, as it tries to get to grips with a crisis that has knocked more than a third off its market value and could harm Germany’s economy. Volkswagen has admitted cheating diesel emissions tests in the United States but Germany’s transport minister says it also manipulated tests in Europe, where it has much bigger sales, and it faces the worst business crisis in its 78-year history.

The German prosecutor’s office said it was investigating Winterkorn over “allegations of fraud in the sale of cars with manipulated emissions data” based on charges filed by about 10 unidentified individuals. Winterkorn, replaced as chief executive on Friday by company veteran Matthias Mueller, said when he quit last week that he was not aware of any wrongdoing on his part and wanted to give the company a new start.

The crisis is an embarrassment for Germany, which has for years held up Volkswagen as a model of its engineering prowess and has lobbied against some tighter regulations on automakers. The German car industry employs more than 750,000 people and is a major source of export income. In a sign of Volkswagen’s own efforts to tackle the crisis, sources close to the matter said it had suspended Heinz-Jakob Neusser, head of brand development at its core VW brand.

Also suspended were Ulrich Hackenberg, the head of research and development at premium brand Audi who oversees technical development across the group, and Wolfgang Hatz, R&D chief at sports-car brand Porsche who heads group engine and transmissions development, they said. One source said Hackenberg was taking legal action against the decision. Volkswagen and Audi declined to comment, while the suspended executives could not immediately be reached.

Winterkorn, who was at the helm of Volkswagen for nine years and was the highest paid CEO on Germany’s blue-chip DAX stock market last year, also could not be reached for comment. A source close to Volkswagen’s board said its executive committee would meet on Wednesday to discuss the appointment of U.S. law firm Jones Day to lead an external investigation.