Friday, January 19, 2007

Former VW Executive Confesses in Corruption Trial

Peter Hartz, whose name is also connected with Germany's welfare reform, admitted breach of trust as his trial opened on Wednesday. He could now get off with a fine and a suspended sentence.

Once one of the country's most respected managers, Hartz, 65, was accused of sanctioning illegal bonuses while director of Volkswagen's human resources department. The payments were allegedly used to finance lavish foreign trips, mainly by the head of the company's works council, Klaus Volkert, and his South American mistress. Other charges relate to visits to brothels and sex parties financed with company funds.

Hartz, who played a key role in drafting Germany's labor and social welfare reforms under
former Chancellor Gerhard Schröder, left the company in July 2005. He admitted in October to "a criminal responsibility for giving preferential treatment to the former works council head."

Sources close to the case said that no witnesses were expected to be called during the two-day trial in Braunschweig, close to the town of Wolfsburg, where Volkswagen has its headquarters.

Hartz is said to have cooperated extensively with prosecutors.

Paid pleasure trips

The VW 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 that VW paid for so-called pleasure trips for work council members to win their allegiance. This included allegations about flying around high-class prostitutes.

The charges against Hartz came after an 18-month investigation, which has also seen the indictment of Hans-Juergen Uhl, a former member of the works council, who is also a member of parliament in Berlin.

Uhl, who represents the co-governing Social Democratic Party (SPD), has been indicted on two counts of being an accessory to fraud and five counts of making false statements under oath.

Volkert was arrested last year because of concerns about the suppression of evidence, but released after two months.

The former works council chief is alleged to have been paid illegal bonuses worth 1.9 million euros ($2.5 million) by Hartz between 1994 and 2005. His mistress is alleged to have received payments totalling 400,000 euros.

DW staff / DPA (win)

Deutsche Welle 01/2007


Post a Comment

<< Home