VW Postpones Expansion Due to Scandal | Business| Economy and finance news from a German perspective | DW | 04.07.2005
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VW Postpones Expansion Due to Scandal

The bribery scandal at German auto giant Volkswagen has led chairman Bernd Pischetsrieder to postpone making a decision on the planned construction of a new factory in India, the business daily Handelsblatt reported on Monday. Pischetsrieder has put the building plans on ice until the allegations of bribes in connection with the construction of the plant have been cleared up, the newspaper said, quoting sources close to suppliers. Berlin daily Tagesspiegel reported that the planned construction of an assembly plant in Angola had also been put on hold in the wake of the scandal. Both papers said VW had declined to comment on the information. The scandal, triggered by the shock resignation last month of the personnel chief at VW's Czech arm Skoda, Helmuth Schuster, looks set to snowball in what threatens to deal a fresh blow to the image of Europe's biggest car maker just as it is beginning to steer itself out a long crisis. VW is hiring independent auditors KPMG to review the situation. Schuster last month quit amid allegations he took bribes from potential suppliers and claims in magazine reports that he used camouflage companies to secure lucrative VW contracts abroad, notably India and Angola. But the scandal looked set to widen last week when the long-serving head of VW's general works council, Klaus Volkert, also announced he was stepping down nine months earlier than planned. The online version of Der Spiegel magazine alleged that Volkert was also involved in Schuster's dubious dealings. WirtschaftsWoche weekly claimed Volkert was simply the "tip of the iceberg" and more resignations would follow, including that of VW's head of personnel, Peter Hartz.

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