By William Boston

BERLIN--German prosecutors have launched an investigation into allegations that an undisclosed number of Daimler AG (DAI.XE) employees may have committed fraud linked to sales of the company's diesel-powered cars, a spokesman for the Stuttgart state's attorney said Thursday.

Daimler dismissed the allegation that it manipulated diesel engines to cheat on emissions tests. A company spokesman cited a German government investigation that determined last year that found no evidence of manipulation of the company's diesel engines.

"Our engines have been made according to current laws and they are in order," said Daimler spokesman Jo(umlaut)rg Howe.

The probe of Daimler employees comes on the heels of the admission by rival Volkswagen AG (VOW.XE) of manipulating nearly 11 million diesel engines worldwide to cheat on emissions tests. Volkswagen pleaded guilty to committing fraud in the U.S., agreeing to pay nearly $25 billion in fines, penalties and compensation to consumers.

-Write to William Boston at william.boston@wsj.com

(END) Dow Jones Newswires

March 23, 2017 07:29 ET (11:29 GMT)