The motor vehicle industry is especially prone to corruption because of business practices that encourage suppliers to put up large sums to win contracts from car makers, a leading German researcher said.

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Immense pressure on suppliers to cut costs or face losing contracts also increases the potential for bribery and other illicit payments, Wolfgang Meinig, head of the Automotive Industry Research Centre in Bamberg told Reuters.


His comments came as German prosecutors widened their investigation into bribes allegedly paid by PSA Peugeot Citroen group component unit Faurecia to current and former employees of Audi, BMW and Volkswagen. Prosecutor Anton Winkler told the news agency on Wednesday that six suppliers, including Faurecia, are under investigation by Munich prosecutors.


“For more than 10 years it has been common practice in contract negotiations for car makers to demand entirely officially sums worth millions from suppliers just so they can make the short list for a contract or a follow-on contract,” Meinig told Reuters. “In my view that is fertile ground for corruption. A purchasing official then asks himself: If my company can rake in millions so easily, why can’t I?”


Germany’s VDA auto industry association has said other sectors are just as likely to see bribery attempts, according to public statistics, the report noted.

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But Meinig disagreed. “I think (corruption) is a particularly grave problem in the auto industry, even if some people in the sector don’t want to hear this,” he told Reuters. “The dependence between manufacturers and suppliers is so strong in hardly any other business.”


Meinig cited in particular “quick savings” worth millions that suppliers are asked to put up to take part in contract tenders. They can be tapped later for “savings on current account” during the life of a contract to ensure they qualify for future business tenders, the report added.