Volkswagen supervisory board chairman Ferdinand Piëch will appear in court today to answer questions 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 mis-using company funds.
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Piëch was chief executive of the Volkswagen group between 1993 and 2002 and denies any involvement in the affair that involved company money being spent on luxury travel and prostitutes in return for cosy industrial relations. Piëch will be questioned about whether he knew of the existence of the secret cost centre ‘1860’, through which the payments were made.
Former head of personnel chief Peter Hartz has taken much of the corporate responsibility for the affair. He was sentenced a year ago to a two-year suspended sentence and a fine of EUR576,000 for his involvement. Hartz acknowledged having approved EUR2.6m in payments for prostitutes and trips for Volkert. Hartz gave evidence in the trial before Christmas supporting his former boss, saying that Piëch had no knowledge of the payments.
Piëch’s position has, however, been put in doubt by statements to the press by a former whistleblower in the Volkswagen finance division. He said he alerted company officials to the existence of the account and that Piech would have been informed. Former finance chief Bruno Adelt gave evidence that he was made aware but that he did not inform Piech. The unnamed whistleblower said that Piech’s former chief of office staff, and current head of Audi, Rupert Stadler, was charged with auditing the cost centre in the light of revelations, and that therefore Piech would have known about the problem. Stadler is being called as a witness next week.
Piëch’s role is important 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 the 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%. 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.
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By GlobalDataThere 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.
The case will continue to attract interest next week when Piëch’s successor, Bernd Pischetsrieder, takes to the stand.
