A former Volkswagen official at the centre of a bribery scandal had been given a two-year suspended jail sentence by a German court.

One time VW personnel head Peter Hartz, also a guiding hand behind former German chancellor Gerhard Schroeder's labour reforms, was fined EUR560,000 ($US726,000; GBP369,000) but escaped jail after cutting a deal with prosecutors, according to medial reports.

The BBC reported he had sanctioned illegal payments to members of VW's powerful works council. Such councils in Germany are made up of workers and management and have a strong decision-making role within major companies and some have argued that the system is a breeding ground for corruption.

The illegal payments were designed to ensure that council members kept close ties to VW's management, the BBC said.

Hartz reportedldy was charged with 44 counts of breach of trust and admitted on Thursday to paying bribes to Klaus Volkert, ex-head of the powerful works council of VW.

Some of his payments were used to pay for luxury trips, including to prostitutes in Brazil, the report said.

Hartz's lawyer Egon Mueller told the court in Brunswick, northern Germany, that "important decisions could not be taken without Mr Volkert's agreement", the BBC said.

Mueller reportedly said the payments were aimed at "creating an atmosphere" in which business could be done.

"They were designed simply to stabilise relations between the two men," he said.

Hartz resigned from VW in 2005.