Prosecutors will today focus on the role of VW supervisory board chairman Ferdinand Piëch in court in the trial of former works council chief Klaus Volkert and former personnel manager Klaus-Joachim Gebauer who are accused of inciting breach of trust by being involved in a sex and bribery scandal at the company.
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Lawyers want to find out if Piëch knew about a slush fund used by VW directors to fund prostitutes and trips in exchange for peaceful labour relations at the company. Piech was chief executive of the group at the time of the affair and has denied any knowledge.
At the weekend, Germany’s Spiegel political magazine published a letter that appears to implicate Piëch. In the letter a former colleague claims that Piëch allocated ‘millions for dubious arrangements’ such as luxury trips, and trips for works council members. Volkswagen has denied the report, and, according to Automobilwoche, a spokesperson said: “We have great doubts that the letter is actually real.”
Piëch is to be called as a witness in Volkert and Gebauer’s trial on 9 January, but this week, according to Automobilwoche, testimony will be heard from former board member for finance, Bruno Adelt, and former Skoda personnel chief, Helmuth Schuster. Schuster was implicated in bribing suppliers and in corruption in India which led to Volkswagen having to abandon plans to set up a plant in Andra Pradesh.
Later this week, former personnel chief Peter Hartz will also be called to the stand. He was sentenced a year ago to a two-year suspended sentence and a fine of EUR576,000 for his involvement in the affair. Hartz acknowledged having approved EUR2.6m in payments for prostitutes and trips for Klaus Volkert.
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By GlobalDataPiëch’s role is being called into question because Volkert’s defence lawyers will use the fact that Volkswagen benefited from millions of euros of savings during the 15 years that Volkert was in post. They argue that it is thanks to Volkert, amongst other things, that Volkswagen survived the early 1990s crisis that resulted in the introduction of the four day week at VW and the lowering of wages by 15%.
There is also the issue that Volkswagen received insurance payments worth EUR4.5m as damages for the scandal from an insurance policy covering directors and officers. The insurance company wants to recover some of that money and, if Piëch is found to have been involved, they will be able to claim their money back from Volkswagen.
The view in Germany is that Piëch is looking increasingly guilty. A survey by Automobilwoche of its readers found that 88% of people do not think it is possible that Piëch could have known nothing about what was going on.
Under German law, works council leaders need to be consulted on major company decisions, and the case is seen as indicative of the lengths company management will go to in order to keep labour bosses on their side.
