VW faces fresh revelations in kickback scandal

5th July 2005, Comments 0 comments

5 July 2005, BERLIN - German carmaking giant Volkswagen AG is facing fresh revelations in a kickback scandal, with new reports claiming employees operated a global network of camouflaged companies.

5 July 2005

BERLIN - German carmaking giant Volkswagen AG is facing fresh revelations in a kickback scandal, with new reports claiming employees operated a global network of camouflaged companies.

Munich-based daily Sueddeutsche Zeitung reported Tuesday that the holding company for the network of the six world-wide companies was called Impesa SA and was based in Switzerland.

The state public prosecutor's office in Braunschweig, a city close to VW's headquarters in Wolfsburg, is currently examining sums of money which were allegedly transferred to accounts of these companies, the newspaper said.

At the same time, there is a suspicion, the Sueddeutsche said, that the VW board agreed to pay for pleasure trips for members of the company's powerful works council, and for the services of high-class prostitutes, in order to influence the works council.

The burgeoning bribery scandal, which centres on VW's Czech-based Skoda operations, has badly shaken the company and has already triggered two high-profile resignations from the group and reportedly resulted in the carmaker placing on hold construction of two new factories - in Angola and India.

Skoda's personnel chief, Helmuth Schuster, left the company in June amid allegations that he took bribes from potential suppliers and that camouflage companies were used to secure lucrative VW contracts abroad, notably in India and Angola.

Last week, the company was rocked again when the head of the works council, Klaus Volkert, announced that he was also stepping down.

The almost daily stream of allegations about kickbacks and bribery at the carmaker comes as the group struggles to implement a tough cost-cutting plan and to head off a sales slump in both China and the United States.

Underscoring the battle ahead for the group, Wolfgang Bernhard, the new head of the VW brand, said in a letter to employees this week that the company stood at the crossroads in its push towards restructuring and improving the quality of its product.

DPA

Subject: German news

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