French Prosecutors Probe Peugeot Parent over Alleged Emissions Fraud

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French prosecutors started a preliminary investigation of alleged fraud at PSA Group, the latest car manufacturer to be targeted over potential violations of emissions rules in the aftermath of Volkswagen AG’s diesel-cheating scandal. The stock fell the most in two months.

The Paris prosecutor’s office opened the probe on April 7 after receiving a report from the French Economic Ministry’s fraud division, a spokeswoman for the prosecutor said Monday by phone. The fraud would have made the cars dangerous to human health, she said. Three judges are assigned to lead the investigation. Paris-based PSA, the maker of Peugeot, Citroen and DS cars, reiterated that it complies with all regulations.

The investigations were sparked by Volkswagen’s September 2015 admission that it installed software in diesel cars that cheated on emissions tests by activating pollution-control systems only during official checks. The probe of PSA and other competitors is part of a wider investigation into diesel vehicles’ nitrogen-oxide emissions in France and the European Union, which has urged member states to further look into cars in their jurisdictions.

PSA’s “vehicles have never been equipped with software or any device that would have allowed them to detect” testing, a spokesman for the carmaker said by phone, adding that the manufacturer hasn’t received notice from the prosecutor about any probe.

Jail Risk

Under French law, carmakers found to have cheated on the vehicle-certification process can be fined as much as 10 percent of their average revenue for the three years prior to the incident. Executives risk up to two years in jail and 300,000 euros ($327,000) in fines.

Shares of PSA fell as much as 3.5 percent, the steepest intraday drop since Feb. 24, and were trading down 1.5 percent at 18.89 euros as of 11:01 a.m. on Tuesday in Paris. That pared the stock’s gain this year to 22 percent, valuing the carmaker at 16.6 billion euros.

The Paris prosecutor’s office started a probe of French carmaker Renault SA in January. While the office has received a report from the Economy Ministry’s examination of Italian-U.S. manufacturer Fiat Chrysler Automobiles NV and Volkswagen, findings haven’t yet arrived for General Motors Co.’s Opel division, the spokeswoman said. PSA is in the process of acquiring Opel.

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