German police arrested a senior Porsche AG executive in the wake of raids this week to gather evidence allegedly linking the sports car maker to Volkswagen AG's emissions scandal, prosecutors said on Friday.
The massive raids on offices and factories used by Porsche, which is owned by Volkswagen, involved 160 police officers and 30 investigators from two German states, Efe reported.
The potential involvement of Porsche could represent a significant widening of the emissions-cheating scandal that has cost Volkswagen more than $25 billion in fines, penalties, compensation for customers and legal fees.
As investigators were sifting through piles of documents, confiscating mobile phones and copying computer drives on Wednesday, prosecutors ordered the arrest of Jorg Kerner, Porsche's head of engine development, who they considered a flight risk, according to people familiar with the situation.
The investigation also targets Michael Steiner, a Porsche board member in charge of research and development and a lower-level engineer who no longer works at the company, according to people familiar with the situation.
Porsche didn't make the three executives concerned available for comment.
"We dismiss these allegations and are doing everything we possibly can to put this in order," Porsche CEO Oliver Blume said on Friday in a letter to the company's workforce, according to The Wall Street Journal.
The three men are not suspected of participating in the original plan to rig diesel engines to cheat emission tests.
They are suspected of not taking action once they learned through an internal investigation that three-litre diesel engine Porsches acquired from sister company Audi AG contained illegal software.
The fresh allegations against Porsche are a new development in the emissions scandal, for the first time linking senior executives from one of Volkswagen's most profitable businesses to the alleged coverup.
The development could result in additional costs to the company just as it is trying to convince investors it has put the scandal behind it.