(Adds further details from memo, prosecutor’s office comment)
* Head of powertrain development held - source
* Arrest comes after raid by prosecutors
* Porsche CEO denies prosecutors’ allegations
By Jan Schwartz
HAMBURG, April 20 (Reuters) - German police arrested the head of powertrain development at Volkswagen’s Porsche sportscar brand and are holding him on remand on concerns he could try to destroy evidence or flee, a person familiar with the matter said on Friday.
The arrest of Joerg Kerner on Thursday was related to ongoing inquiries into emissions manipulation at Volkswagen, more than two years after the German carmaker admitted cheating on U.S. exhaust tests, the person said.
A spokesman for Porsche declined to comment. Kerner was not available for comment.
The Stuttgart public prosecutor’s office confirmed the arrest of one of three current or former employees of Porsche targeted in a search of Porsche and its sister brand Audi earlier this week.
A spokesman for the prosecutor’s office declined to name the person, but said it was not a Porsche management board member.
The arrested individual will remain in jail as long as he is considered a flight risk.
Among those being investigated is Michael Steiner, board member and head of development at Porsche, another source said.
Porsche declined to comment on the investigation saying it was an ongoing matter, and declined to make Steiner available for comment.
Earlier this year, prosecutors widened an investigation into Audi, which developed a 3.0 litre V6 diesel engine that was used in about 80,000 VW, Audi and Porsche models found to have been equipped with illicit software.
“The prosecution is now accusing the three suspects and Porsche itself of having known that these engines contained illicit engine control devices,” Porsche Chief Executive Oliver Blume told staff in a memo, excerpts of which were seen by Reuters on Friday.
“We reject these allegations and will do our utmost to clear up the matter,” Blume said in the memo, which was first reported by the newspaper Bild am Sonntag earlier on Friday.
He appealed to staff not to let themselves be rattled by the investigation and to have faith in management to handle the matter as quickly as possible.
“We owe it to our customers and the public, which trust the Porsche brand and can continue to do so,” he said. (Reporting by Jan Schwartz and Maria Sheahan; Editing by Larry King and Mark Potter)