Former VW director confesses to corruption

17th January 2007, Comments 0 comments

17 January 2007, Braunschweig, Germany (dpa) - A former senior manager at Volkswagen AG confessed Wednesday to sanctioning illegal payments in a sex and bribery scandal at Europe's biggest carmaker. Peter Hartz, 65, expressed regret for his actions and accepted "criminal responsibility" for them, his lawyer told the court at the start of a two-day trial in Braunschweig. Hartz admitted being the initiator of abuse which saw nearly 2 million euros (2.6 million dollars) in illegal bonuses paid to the head of

17 January 2007

Braunschweig, Germany (dpa) - A former senior manager at Volkswagen AG confessed Wednesday to sanctioning illegal payments in a sex and bribery scandal at Europe's biggest carmaker.

Peter Hartz, 65, expressed regret for his actions and accepted "criminal responsibility" for them, his lawyer told the court at the start of a two-day trial in Braunschweig.

Hartz admitted being the initiator of abuse which saw nearly 2 million euros (2.6 million dollars) in illegal bonuses paid to the head of the company's works council, Klaus Volkert.

The payments, made when he was director of Volkswagen's personnel department, were allegedly used to finance lavish foreign trips by Volkert and his Brazilian mistress, Adriana Barros.

Hartz, who left the company in July 2005, said he ordered preferential treatment be given to Volker because of the important role he played in the company.

The scandal highlighted the lengths the respected former manager went to in order to keep work's council members on the management's side. Under law, works council leaders need to be consulted on major decisions taken by leading German companies.

Hartz, who also gave his name to the labour market reforms introduced under former chancellor Gerhard Schroeder, faces 44 counts of breach of trust.

A small group of protesters jeered Hartz when he arrived by car for the hearing in Braunschweig, close to the town of Wolfsburg, where Volkswagen has its headquarters.

No witnesses were expected to be called during the two-day trial after the former executive cooperated extensively with prosecutors in advance of the proceedings.

Hartz could face a prison term of up to five years if convicted, but the judge in the case indicated he could walk away with a two- year suspended sentence and a fine when the verdict is handed down on January 25.

The scandal, which surfaced in June 2005, originally centered on allegations of bribes from potential suppliers and the creation of dummy companies which were used to secure lucrative contracts abroad.

But it quickly widened to include claims about flying around high- class prostitutes, visits to brothels and sex parties financed with company funds.

Prosecutors, who spent 18 months preparing their case, dropped charges that Hartz used cash from Volkswagen to pay for a flat frequented by prostitutes.

The former manager was the first person to stand trial in the case. Prosecutors have also indicted Hans-Juergen Uhl, a former member of the work's council who is a member of parliament in Berlin.

Legislators lifted the parliamentary immunity of Uhl, a member of Chancellor Angela Merkel's coalition partner, the Social Democratic Party, so he could stand trial on two counts of being an accessory to fraud and five counts of making false statements under oath.

Volkert was arrested late last year because of concerns about the suppression of evidence, but released after two months. Investigations against him are still continuing.

The former works council chief is alleged to have been paid illegal bonuses worth 1.9 million euros by Hartz between 1994 and 2005. His mistress is alleged to have received payments totalling 400,000 euros.

DPA

Subject: German news

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