Public prosecutor launches probe into VW scandal

14th July 2005, Comments 0 comments

14 July 2005, BRAUNSCHWEIG - The public prosecutor's office in the northern German city of Braunschweig began taking evidence from witnesses in the sex and bribery scandal that has rocked giant carmaker Volkswagen AG.

14 July 2005

BRAUNSCHWEIG - The public prosecutor's office in the northern German city of Braunschweig began taking evidence from witnesses in the sex and bribery scandal that has rocked giant carmaker Volkswagen AG.

However, a spokesman for the prosecutor's office, Klaus Ziehe, declined to say how many and which witnesses are to be called in the scandal, which has already resulted in the resignation of several prominent company figures, including the group's high-profile personal director Peter Hartz.

VW's supervisory board said Wednesday it was accepting Hartz's offer to resign following the scandal which follows a stream of allegations about kickbacks being paid by 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.

More recently, the affair widened following claims that VW paid for so-called pleasure trips for senior workers' representatives. This included flying around high-class prostitutes.

Coming as Germany gears up for an early election, the scandal has also raised questions about the nation's labour relations system and the often close ties between union representatives and management based around the nation's somewhat unique company works' council.

This allows for executives to consult with union representatives on key decisions.

In a sense VW embodies the German consensual approach to labour relations with the state of Lower Saxony also having an 18 per cent stake in the carmaker and its premier sitting on the board.

Ziehe said that the prosecutor's office hearings would now be held on more or less a regular basis. Braunschweig is near the VW headquarters in Wolfsburg.

In particular, the prosecutor's investigation is to establish whether there was any breach of trust and fraud in the scandal with VW also conducting its own internal investigation.

An interim report of the investigation is due to be presented on July 22.

DPA

Subject: German news

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