Criminal investigation launched against Hartz

7th October 2005, Comments 0 comments

7 October 2005, WOLFSBURG, GERMANY - Prosecutors in Germany Friday said they have launched a criminal investigation against disgraced Volkswagen AG former personnel director Peter Hartz in the wake of a bribery and sex scandal that has rocked the nation.

7 October 2005

WOLFSBURG, GERMANY - Prosecutors in Germany Friday said they have launched a criminal investigation against disgraced Volkswagen AG former personnel director Peter Hartz in the wake of a bribery and sex scandal that has rocked the nation.

Prosecutors in Braunschweig said Hartz was under investigation for fraud.

Hartz had been VW personal director since 1993 until he stepped down in July. Many industry analysts see his departure as helping to pave the way for further restructuring of the company, which slumped into the red last year and reported an operating loss of EUR 53 million in the first quarter of 2005.

The 63-year-old Hartz is a member of Chancellor Gerhard Schroeder's ruling Social Democrats (SPD) and was the architect of the government's tough and controversial welfare and labour market reforms.

He has also given his name to many of the reforms including what is now known as Hartz IV, which involves controversial steps to cut benefits for the long-term unemployment.

Hartz, who has strongly denied any involvement in the scandal, said he wanted to stand aside to head off further damage to VW.

A successor has not been named, with VW chief Bernd Pischetsrieder taking over the post until a replacement has been found.

The scandal originally centred on allegations about the payment of bribes from potential suppliers and the creation of camouflage companies which were used to secure lucrative VW contracts abroad.

The network of camouflage companies was reported to have stretched from India, Angola, the Czech Republic, Luxembourg and Switzerland.

Helmuth Schuster, the personal chief of VW's Skoda operations in the Czech Republic left the company in June as allegations about kickbacks from suppliers began to emerge.

DPA

Subject: German news

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