Volkswagen Employees Probed in New Kickback Scandal | Business| Economy and finance news from a German perspective | DW | 24.07.2006
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Volkswagen Employees Probed in New Kickback Scandal

A Frankfurt prosecutor is investigating whether two Volkwagen employees and a former executive took kickbacks from a supplier. It is the second such corruption scandal to rock Europe's largest carmaker in the past year.

More Volkswagen employees are under suspicion

More Volkswagen employees are under suspicion

Two managers and a former employee of Europe's biggest car manufacturer, Volkswagen, are under investigation by a Frankfurt prosecutor over alleged kickbacks from a French supplier, company officials said Sunday.

Officials are investigating whether a manager from the Audi unit and another at Volkswagen -- along with a former Volkswagen executive -- accepted bribes worth hundreds of thousands of euros from French car parts supplier Faurecia SA, according to company spokesman Hartwig von Sass. He added that the company is cooperating with prosecutors in their probe.

"As the company affected by this, we are supporting the investigation of the prosecutors and the Federal Criminal Office," von Sass told the Associated Press.

He declined to provide further details.

A search of the employees' apartments uncovered 70,000 euros ($88,600) in cash hidden in a utility room, German magazine Der Spiegel reported.

Previous scandal shook company

The probe follows an investigation last year into managers that had created fake companies to defraud authorities and enrich themselves while spending company money on personal travel, jewels, alcohol and sex.

Bernd Pischetsrieder

VW officials say they are cooperating with prosecutors

Then, VW asked prosecutors to investigate personnel executive Klaus-Joachim Gebauer, fired last June, and former Skoda chief Helmuth Schuster, who allegedly created shell companies in countries such as India, Angola and the Czech Republic to defraud local authorities seeking business with Volkswagen.

Prosecutors are also investigating whether company managers and members of its worker's council received illegal privileges including lavish foreign trips paid for by the company.

"The network of shell companies is larger and more complex than forseen... in all 50 to 60 names have emerged in this affair," VW chairman Bernd Pischetsrieder told the German weekly Stern last August.

That corruption scandal led to the resignation of VW's head of human resources, Peter Hartz, and the former head of its works council, Klaus Volkert as well as Schuster.

Indian connection

Then, a top minister in India's southern state of Andhra Pradesh admitted to paying money to try secure a deal with the German auto giant but denied it was a bribe.

"The money was paid to Vasishta Wahan which we were told is an Indian arm of Volkswagen," state Chief Minister Y.S. Rajasekhara Reddy told reporters in this southern Indian city last year.

Reddy was reacting to charges that the state government had paid two million euros to Vasishta Wahan, a shadowy company, which shares the same initials as the automaker and projected itself as the Indian arm of Volkswagen.

The Andhra Pradesh government said that Schuster "pressured" them to pay five million euros to Vasitha Wahan, which he claimed was Volkswagen's Indian arm. The sum was to be paid as equity for a proposed Volkswagen manufacturing plant to be set up in Andhra Pradesh's major port city of Visakhapatnam.

Plans for the plant are on hold.

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