VW says German prosecutor searched law firm handling diesel scandal

FRANKFURT -- German prosecutors have searched the offices of the U.S. law firm hired by Volkswagen to investigate its diesel emissions test cheating, as they step up their efforts to identify those involved in the scandal.

VW condemned the search, carried out on Wednesday but reported on Thursday, as "unacceptable in every way" and said it would use every legal step to defend itself.

The law firm, Jones Day, declined to comment. The Munich prosecutor's office was not immediately available for comment.

Jones Day was searched on the same day as Volkswagen Group's premium brand Audi's headquarters were searched, in a sign prosecutors are stepping up efforts to find who was responsible for -- and who may have known about -- the biggest business crisis in the 80-year-old group's history.

"In our opinion the search of a law firm mandated by a company contravenes the principles of the code of criminal procedure," VW spokesman Eric Felber said in a statement.

While client attorney privilege is sacrosanct when there is a formal mandate, there is a gray area when a law firm is not formally tasked with representing a particular individual, law professor Werner Beulke said. In northern German Federal states, prosecutors are barred from searching law firms but there is no nationwide ruling on the matter from Germany's Federal Court of Justice, leaving an opening for southern Bavarian prosecutors to search VW's law firm, Beulke said.

Jones Day was mandated by VW's supervisory board to lead an investigation of its emissions test cheating shortly after the scandal broke in September 2015.

VW has never published the full findings of Jones Day, although a summary was handed to the U.S. Department of Justice, which earlier this year forced VW to pay a $4.3 billion settlement to resolve its pollution troubles.

Jones Day found wrongdoing by certain high-level VW employees but exonerated members of the management board.

VW has said its executive board did not learn of the illegal emissions cheating devices installed in VW cars until late August 2015 and formally reported the cheating to U.S. authorities in early September that year.

In January, German prosecutors in Braunschweig widened their probe of VW, searched 28 premises, and raised the number of people under investigation to 37 from 21, including former CEO Martin Winterkorn.

In February, a media report said former chairman Ferdinand Piech had informed top directors about potential cheating of diesel emission tests six months before the scandal became public. VW strongly denied this.

Audi search

German investigators searched Audi offices for a second day on Thursday in connection with the emissions scandal.

Some 100 officials had started a search early on Wednesday of offices at Audi's headquarters in Ingolstadt, Germany and its Neckarsulm plant, at VW Group's base in Wolfsburg and several other locations including private homes.

Munich prosecutor's office said on Thursday that investigators had already confiscated a large amount of material since Wednesday morning, and some people have been interrogated.

A spokesman declined to provide further details and said he could not yet say when results of the investigation may become available.