Prosecutors indict ex-Volkswagen exec

16th November 2006, Comments 0 comments

16 November 2006, Braunschweig, Germany (dpa) - Prosecutors Wednesday indicted a former Volkswagen board member who was a key figure in a sex and bribery scandal that rocked Europe's biggest carmaker last year. Peter Hartz is accused of sanctioning illegal bonuses that helped fund the lavish lifestyle of the head of the company's works council and his South American mistress. Hartz, who left the company in July last year, admitted in October to "a criminal responsibility for giving preferential treatment t

16 November 2006

Braunschweig, Germany (dpa) - Prosecutors Wednesday indicted a former Volkswagen board member who was a key figure in a sex and bribery scandal that rocked Europe's biggest carmaker last year.

Peter Hartz is accused of sanctioning illegal bonuses that helped fund the lavish lifestyle of the head of the company's works council and his South American mistress.

Hartz, who left the company in July last year, admitted in October to "a criminal responsibility for giving preferential treatment to the former works council head" Klaus Volkert.

Prosecutors have charge Hartz with 44 counts of breach of trust in connection with nearly 2 million euros (2.5 million dollars) in unsanctioned bonus payments to Volkert and his mistress during his time as personnel director from 1994-2005.

The 64-year-old Hartz was also the architect of former Chancellor Gerhard Schroeder's tough and controversial welfare and labour market reforms, some of which bear Hartz's name.

The VW 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 contracts abroad.

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

But the scandal widened to include claims that the company paid for so-called pleasure trips for work council members so as to keep them on their side. This included allegations about flying around high-class prostitutes.

The scandal also raised questions about the nation's labour relations system that allows union representatives based on works councils to consult with management on key decisions.

The indictment comes a week after the sudden departure of Volkswagen AG chief Bernd Pischetsrieder after apparently losing a power struggle with Volkswagen group chairman Ferdinand Piech.

DPA

Subject: German news

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