German prosecutors say won't be lenient with Volkswagen

HAMBURG (Reuters) - German prosecutors will grant Volkswagen (VOWG_p.DE) no mitigation for a record vehicle emissions settlement it faces in the United States and want VW to pay them a separate fine, a spokesman said.

Prosecutors in Braunschweig, near Volkswagen's (VW) Wolfsburg headquarters, are demanding VW be fined based on the level of the profits it made from selling about 11 million cars equipped with illicit engine software.

VW last month agreed with the U.S. government and regulators to pay $15.3 billion to get about half a million emissions-cheating diesel cars off U.S. roads.

But the scale of U.S. penalties is no reason to exercise leniency on VW's regulatory offence, a spokesman for the Braunschweig prosecutor's office said on Monday.

"We cannot pay heed to what VW may have to pay in other countries when we go about setting the fine," he said. "We cannot say: 'VW is already requested to pay a lot in the U.S., so let's not be so strict.' That's not possible."

Under Germany's law on regulatory offences, prosecutors are assessing the "economic advantage" VW enjoyed from using cheating software, rather than expensive exhaust filter systems, to manipulate pollution tests, the spokesman said, adding it will be difficult to determine the level of profits VW has reaped from its wrongdoing.

Industry observers in Germany estimate this could result in a fine of several hundreds of millions of euros.

Braunschweig prosecutors, which last month started probing former VW Chief Executive Martin Winterkorn and VW brand chief Herbert Diess over suspicion of market manipulation, declined comment.

Europe's largest automaker confirmed on Monday it has been notified by prosecutors about the latest probe but declined further comment.

The proposed U.S. settlement would move VW close to the 16.2 billion euros (£13.8 billion) it has set aside to cover the costs of the scandal.

VW still faces criminal probes in the United States, Germany and South Korea as well as lawsuits from investors around the world suing the carmaker for what they describe as losses incurred after the manipulations were disclosed in September.

(Reporting by Jan Schwartz and Andreas Cremer; Editing by Ruth Pitchford)