Dirty Business
January 9, 2008
Speaking as a witness to the civil court in the northern German city of Brunswick (Braunschweig), Piech said he was unaware of a system that provided leaders of the Volkswagen's trade union with cash and favors in return for peaceful labor relations.
"At no time during my mandate did I have knowledge of any such abuses," said Piech, who was chief executive of Volkswagen from 1993 to 2002.
He was giving testimony in the trial of Klaus Volkert and Klaus-Joachim Gebauer, who are charged with inciting breach of trust and breach of trust, respectively.
Gebauer, once a Volkswagen personnel executive, and Klaus Volkert, former chairman of the company's workers' council, are accused of extracting money from a corporate slush fund to pay for bonuses, vacations and prostitutes' services for labor leaders.
Other bonuses on the side
In addition, 64-year-old Volkert is accused of setting up a contract between Volkswagen and his Brazilian mistress Adriana Barros under which she received 400,000 euros ($589,560) without providing anything in return.
It is also alleged that Volkert and his girlfriend received a further 290,000 euros for travel, hotel costs, shopping purchases and other "non-business-related activities," according to DPA news agency.
Payments totaling some 2.6 million euros ($3.8 million) may have been made to Volkert.
Piech is a grandson of auto engineer Ferdinand Porsche and a central figure in the German automotive industry. After retiring in 2002 as chief executive of Volkswagen, he became chairman of the supervisory board.
Part of a larger corruption network
It is the third trial related to the corruption scandal, which again exposed the close relations between management and VW unions and the willingness of company chiefs to appease labor leaders. It was the first time Piech himself appeared as a witness.
Last year, former VW human resources director Peter Hartz received a suspended two-year sentence and an around half-a-million-euro fine fine for his participation in the scandal, which was revealed in June 2005.
Hartz had confessed to authorizing illegal payments and being the initiator of the corruption network that saw payments made to Volkert to rally union support for company decisions.
The scandal originally involved bribes from potential suppliers and the creation of fake companies to secure lucrative foreign contracts. It later expanded to include the claims about prostitutes and sex parties being financed with company funds.
German judges decided in late 2007 to begin a new enquiry after an unidentified former employee said Piech was informed of the practices in the mid-1990s and had ordered an internal investigation.
Hartz has maintained that he was solely responsible for authorizing the payments, telling the court that he told Piech only in "an informal manner" in 1994 of Volkert's demands to be paid better but emphasized that "details were not mentioned," according to AFP news agency.