VW Scandal Puts Pressure on Works Council | Business| Economy and finance news from a German perspective | DW | 07.07.2005
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VW Scandal Puts Pressure on Works Council

The growing bribery scandal at Volkswagen has led critics to challenge the system of co-determination in labor relations. It was long considered the springboard for West Germany's postwar economic miracle.


Volkswagen's image is going downhill

Fresh accusations have surfaced against a key figure on Volkswagen's (VW) supervisory board. The German edition of the Financial Times alleged on Thursday that Peter Hartz, head of human resources at Europe's biggest carmaker VW, had given instructions that a special fund be made available to the company's works council.

Hartz also ordered that there should be no monitoring as to how the money was spent, the paper said.

Volkswagen admitted that it had given the works council money, but had stuck strictly to the law.

Financial Times Deutschland also claimed that Hartz told his staff to help the former head of the works council, Klaus Volkert, arrange trips abroad. He reportedly asked them not to investigate whether these were connected with his works council duties.

Investigations could continue for months

Hartz is well-known in Germany, having lent his name to the government's unpopular welfare reforms. Volkert resigned from his post as head of VW's works council last week.

Skoda Logo

The VW subsidiary Skoda is based in the Czech Republic

Volkert's departure came after the head of personnel at VW's Skoda unit, Helmut Schuster, stepped down amid allegations of bribery and dirty dealings.

Police in Lower Saxony are now investigating Schuster's activities and those of a former member of VW's human resources department, Klaus Joachim Gebauer.

The investigations could on for months because of leads that need to be followed outside Germany. Skoda is located in the Czech Republic.

Questioning Germany's system of co-determination

The scandal has prompted Rainer Brüderle, a leading figure in Germany's pro-business FDP party, to call for a reform of Germany's system of "Mitbestimmung" or co-determination.

Co-determination means that employees participate in a company's material decisions through their representatives on the supervisory board. Many people in Germany say this system has given the country years of trouble-free industrial relations.

Critics of Volkswagen, though, said the scandal was even made possible by the cozy relationship that exists between management, workers' representatives and local politicians. Almost 20 percent of VW is owned by the state of Lower Saxony and a special law, in force for 44 years, protects it from hostile foreign takeovers.

Mistakes have been made

The attack on co-determination prompted a swift response from Christian Wulff, premier of Lower Saxony and member of the conservative CDU.

Christian Wulff

Christian Wulff thinks co-determination is still a viable system

"I think Brüderele's remarks are inappropriate," said Wulff. "It would not be helpful to let them turn into a general debate about co-determination or the role of the trade unions."

He added, however, that it was true that mistakes had been made.

"Those who have committed them should be called to account," said Wulff.

The head of the Social Democrats SPD in Lower Saxony Wolfgang Jüttner said just because a trade unionist had done wrong did not mean the whole system of co-determination should be thrown out.

"After all, if a businessman takes money, you don't question capitalism in itself," said Jüttner.

The new head of the VW works council, Bernd Osterloh, also lashed out at Brüderle's attack.

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