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Last updateThu, 29 Jan 2015 11am

 

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Volkswagen slush fund duo sentenced

Two men at the heart of a multi-million pound bribery scandal at the world's largest carmaker have been convicted by a court in Germany.

The former head of the workers' council at Volkwagen, Klaus Volker, was sent to prison for two years and nine months.

Hans-Joachim Gebauer, formerly a personnel manager, received a suspended one-year jail term.

Gebauer was responsible for administering a slushfund to keep union bosses happy during drastic restructuring operations at the carmaker.

Micro-management 

The firm's chairman and former chief executive, the iconic Ferdinand Piëch, told a German court that he had no idea that the firm had paid an estimated €2.6 million (£1.8 million) for parties, escorts, brothel visits, viagra, jewellery, backhanders and holidays for wives and mistresses at the company’s expense out of a special bank account, referred to as account 1860, between 1995 and 2005.

He added that the luxury car giant had an estimated 5,000 to 7,000 different bank accountants and that it had not been his job to keep track of them. 

Piëch, who had a reputation for micro-management, claimed that was unaware of perks extended to union representatives under his watch.

He added that 30,000 redundancies had been avoided after he took over as the firm’s head only because VW was able to reach agreement with unions and employee representatives on a four-day working week and other stringent measures to avoid a collapse.

Illegal bonuses

Volkswagen’s former head of human resources Peter Hartz last year pleaded guilty to paying Volkert a total of €1.9 million (£1.3 million) in illegal bonuses. He was found guilty of breach of trust and given a fine plus a two-year suspended sentence.

The case was reopened after an unnamed whistle-blower alleged that  Piëch had not only been aware of the bribes, but had ordered an internal investigation into corruption in the mid-Nineties.

Both Gebauer and Volkert have denied defrauding the company and said that, by contrast, they were merely at the receiving end of a company-run system of rewarding employees with escorts and hospitality. They said on Friday that they plan to appeal against the verdict.

The case has focused attention sharply on Germany’s much-hailed consensus economy. Union leaders and employee representatives are involved in important decisions, including investments, in large companies in Germany.

An investigation into a similar sex and corruption scandal at Volkswagen subsidiary Skoda is still ongoing.

This case focuses on the former Skoda personnel manager Helmuth Schuster, who is accused of defrauding the firm and accepting bribes and prostitutes offered to him by the car manufacturer's suppliers.

A third investigation against electronics firm Siemens involves allegations of hundreds of millions of Euros in backhanders paid by the firm to potential customers.

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