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Volkswagen loses bid to block investigators examining legal files

Reuters  |  KARLSRUHE, Germany 

KARLSRUHE, (Reuters) - has lost a legal challenge to prevent prosecutors from examining unpublished documents about its emission scandal, with Germany's top court ruling on Friday that files seized from a U.S. firm may be reviewed.

It means the information from the files may be made public as part of any criminal proceedings, thus providing more ammunition for shareholders and seeking damages.

Shortly after the dieselgate scandal broke in September 2015, hired firm and advisory firm to investigate the issue and look at who was responsible.

never published the findings of the investigation, although a summary was compiled in the form of a "Statement of Facts" for the

Prosecutors searched the offices of in March 2017 in connection with a fraud probe related to 3.0 litre diesel engines made by VW's premium unit

fought the use of any files taken in the raid, and the constitutional court last July issued a temporary order blocking prosecutors from assessing the material.

The dismissal of VW's legal challenge by the on Friday is a further blow to VW, which is still grappling with the implications of the dieselgate scandal almost three years after it came to light.

state prosecutors said it was not yet clear when they would start to examine the seized folders and computer data, but that they hoped they would make their investigations easier.

shares were down 0.7 percent at 1328 GMT, slightly underperforming the DAX index of leading German shares.

SEIZURE JUSTIFIED

The ruling comes just weeks after VW was fined 1 billion euros ($1.2 billion) over emissions cheating, one of the highest fines ever imposed on a company by German authorities.

Munich prosecutors have also widened a probe into VW's luxury brand to include now suspended among the suspects accused of fraud and

Lawyers enjoy some protection from raids in Germany, but the court on Friday said that the seizure of the Jones Day documents did not infringe on VW's right to a fair legal process. It said that as a U.S. firm, Jones Day could not ask for protection of the German constitution and that the lawyers themselves, who had complained, were not personally affected.

The court also said that there was a risk of abuse should lawyers be protected from raids in anything other than special circumstances, because evidence could be "purposefully stored with lawyers or only selectively published".

VW said it welcomed the fact that the court's decision brought some clarity on the issue, even if the court disagreed with the carmaker.

The statement of facts, published as part of a $4.3 billion settlement with U.S. authorities, detailed a concerted effort by certain VW employees to destroy documents in anticipation of an order to preserve them.

The investigations singled out six senior managers below board level, an and other VW employees. VW has argued that the development of illegal software, also known as "defeat devices", was the work of low-level employees, and that no management board members were involved.

U.S. prosecutors have challenged this by indicting VW's former Last month, Munich prosecutors arrested Stadler, though he has not been charged with any crime.

($1 = 0.8536 euros)

(Reporting by Ursula Knapp; Additional reporting by Irene Preisinger and Joern Poltz; Writing by Maria Sheahan and Victoria Bryan; Editing by Emelia Sithole-Matarise, and Jan Harvey)

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Fri, July 06 2018. 20:02 IST
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