Scandal hits over politicans'company pay checks

14th January 2005, Comments 0 comments

14 January 2005, BERLIN - Giant carmaker Volkswagen AG has halted payments to employees who move into politics in the latest twist in a scandal that has rocked Germany about parliamentarians topping up their salaries with corporate income.

14 January 2005

BERLIN - Giant carmaker Volkswagen AG has halted payments to employees who move into politics in the latest twist in a scandal that has rocked Germany about parliamentarians topping up their salaries with corporate income. 

But this week's decision by Volkswagen, which is Europe's biggest auto maker, to pull the emergency brake and stop payments to employees who go into politics underlines historically close ties between VW and the state which run from its genesis under the Nazis to the present day.

"No other German company was created with such close links to the state - or more precisely to the Nazi idea of the 'Volk' community - than Volkswagen AG, " said the newspaper Die Welt.

Adolf Hitler laid VW's foundation by pushing for production of a cheap car for the masses soon after taking power in 1933. Several prototypes were designed in 1936 and in 1938 work was started what has become VW's world headquarters at Wolfsburg.

World War II halted car production and after the Nazi defeat the plant - which had been converted for wartime production of a jeep- like vehicle - wound up in the British occupation zone.

After starting production of what became the legendary VW Beetle, the British forces turned the company over to the German government.

The state-run VW become part of the German economic miracle and over 50 years later the company is still - in effect - under state control.

Ties to Germany's current political leadership could not be closer: Chancellor Gerhard Schroeder served from 1990 to 1997 on VW's supervisory board while premier of Lower Saxony state which owns 18 per cent of Volkswagen's shares.

State ownership was beefed up by the 1960 federal "Volkswagen Law" which confers special voting rights to state holdings and requires an unusually high 80 percent majority for key decisions, such as a takeover.

The European Union is challenging this rule as infringing on the free movement of capital - much to the anger of Berlin.

"VW law? What company has its own law?" asked the Frankfurter Allgemeine newspaper in a sarcastic commentary.

Schroeder - who insists on VW cars such as the Audi A8 or Phaeton as his official limousine - is not the only top mover and shaker with close ties to Volkswagen. The brains behind Schroeder's economic and social reform package, SPD member Peter Hartz, is a VW executive.

But amid public anger over corporate pay for politicians, VW on Thursday named six state and federal parliamentary members of Schroeder's Social Democratic Party (SPD) on its payroll and announced it was ending such payments. Another 367 VW employees serve in local political bodies on a voluntary basis, the company said.

VW had been allowing employees who won high political office to go on leave while still drawing their salaries. This meant SPD members from Volkswagen were getting double pay packages with parliament alone paying them over EUR 10,000 a month in salary and benefits.

"This ... was the oil between Volkswagen and politics," said Die Welt.

These payments have been a public relations disaster for the SPD but the main opposition Christian Democrats (CDU) have just as much egg on their faces.

The CDU's number two, Laurenz Meyer, was forced to resign last month after it was revealed he had been receiving cash under a similar system from energy giant RWE. Other top CDU leaders were also revealed to be on the RWE payroll.

Chancellor Schroeder has not been accused of any wrongdoing and media reports underlined that he paid the normal list price for a modest VW Touran van used by his wife Doris.

This contrasts with the SPD mayor of Wolfsburg who, according to the normally well-informed Bild tabloid, was given a VW Golf free of charge, along with free petrol and EUR 5,000 in murky, monthly VW money.


Subject: German news

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