Paying the Piper

For decades, Aldi Nord, the company's northern German branch, illegally financed AUB, a small union which is considered more employer friendly, according to a report in Germany's Sueddeutsche Zeitung newspaper.

Verdi head Frank Bsirske said Aldi broke the law that prohibits any attempt to influence the works council elections or manipulate the councils in any other way.

The budget supermarket chain is the latest German company to become entangled in a corruption scandal that has also engulfed the engineering giant Siemens and the postal company PIN. Siemens is similarly accused of financing AUB, while PIN allegedly made illegal payments to the postal union GNBZ.

Covert payments to disgraced union boss

Aldi Nord reportedly covertly transferred money via a legal firm to the account of the former head of AUB, Wilhelm Schelsky, who is currently in custody awaiting trial in connection with the Siemens affair.

Schelsky is accused of having received some 50 million euros ($78 million) from Siemens managers in return for establishing a pliant counterweight to the engineering union IG Metall.

The discount grocery chain told the Sueddeutsche Zeitung that it did pay 120,000 euros for an AUB member to train Aldi works council members, but denied any wrongdoing.

"We did not make the payments directly in order to avoid creating the impression that we wanted to influence the training," Aldi stated. The company added that this had not been the case and emphasized that its actions had been legal.

Verdi's Bsirske has called upon the family-owned firm to take responsibility for the covert sponsoring of AUB or take action against those responsible in the company management. He said that Aldi's use of such methods to "suppress union work" raised questions about the integrity of those at the top of the company.

The company said that until AUB head Schelsky's arrest last year that it had regarded him as the legitimate chairman of AUB. It stressed that it had not been trying to hamper the work of Aldi Nord's works councils. Aldi said works council members at Aldi Nord had depicted AUB and Schelsky as a "trustworthy alternative" to Verdi.

Observers see the recent scandals as an assault on the principle of co-determination, a central pillar of German labor relations and the country's social market economy. Works council representatives are elected by all employees in a firm and their agreement is needed for a range of important decisions.