German prosecutors launch tax evasion probe at Volkswagen

The logo of German carmaker Volkswagen is seen at a VW dealership in Hamburg, October 28, 2013. Volkswagen is due to present company results on Wednesday. REUTERS/Fabian Bimmer

HAMBURG (Reuters) - German prosecutors have launched an investigation into suspected tax evasion in connection with cheating on emissions tests by Volkswagen VOWG_p.DE, adding to the intense scrutiny of Europe's biggest carmaker.

The investigation focuses on five Volkswagen employees, a spokesman for the prosecutor’s office in the northern German city of Braunschweig, near Volkswagen’s Wolfsburg headquarters, said on Tuesday, confirming an earlier media report.

As is customary in Germany he did not name any of the suspects.

Volkswagen admitted in September that it installed software in up to 11 million diesel vehicles worldwide that vastly understated their actual emissions of smog-causing nitrogen oxides, causing the biggest business scandal in Volkswagen’s 78-year history.

Earlier this month it said it had also understated carbon dioxide emissions, and thereby also the fuel consumption, of 800,000 cars sold in Europe.

As Germany’s car tax is rated according to a vehicle’s fuel consumption, the prosecution is now looking into whether owners of the affected Volkswagen vehicles underpaid on taxes, a matter which the prosecution’s spokesman said was “not small”.

The main focus of the investigation is tax evasion, but it could also involve fraud, he said.

This investigation will run alongside an ongoing separate probe, in which Braunschweig’s prosecution is investigating several people connected with Volkswagen on suspicion of criminal offences like fraud or violation of competition rules.

Reporting by Jan Schwartz; Writing Maria Sheahan; Editing by Harro ten Wolde, Greg Mahlich