Broken Hartz Former VW Personnel Boss Peter Hartz on Trial For Corruption

Former Volkswagen personnel boss Peter Hartz has gone on trial in Germany, charged with illegally awarding a union boss and his lover more than €2 million. It could be the end to a glittering career, during which Hartz acted as an adviser to Gerhard Schröder and even gave his name to labor market reforms.

Former VW personnel boss Peter Hartz is facing an ignominious end to his career.

Former VW personnel boss Peter Hartz is facing an ignominious end to his career.

Peter Hartz, the former Volkswagen manager and one-time adviser to the German chancellor, faces an ignominious end to his career. VW's former personnel chief goes on trial on Wednesday, accused of illegally giving cash and other perks to top-ranking union officials. Hartz faces 44 charges of breach of trust and if convicted could face up to five years in prison, or hefty fines. The trial in the city of Braunschweig is only expected to last two days.

Prosecutors have dropped a separate charge that he had used company funds to pay for prostitutes during business trips. Hartz, who is 65, resigned from the company he had worked at for 50 years in 2005. He had acted as an adviser to the former Chancellor Gerhard Schröder on reforming Germany's unemployment benefits scheme and even gave his name to the unpopular "Hartz IV" set of labor market reforms, which have become a household name in Germany.

The case against Hartz revolves around the accusation that he awarded illegal bonuses worth €1.9 million ($2.5 million) to Klaus Volkert, the former head of VW's employee council between 1994 and 2005. He is also charged with paying €400,000 to Volkert's former lover. Volkert was arrested in November but was subsequently released in December. No formal charges have so far been brought against him, though this could change.

The scandal has revealed just how cozy things can get between a company's management and its labor representatives. Trade union leaders play an important role in corporate Germany, as German law stipulates that they sit on the board of directors and have to be consulted on any new changes, such as where to locate production facilities. The German industrial relations system is based on cooperation rather than confrontation, with management and labor representatives solving disputes by, for example, reaching agreements to save jobs through shorter working weeks.

The case isn't the only current legal headache for the automobile manufacturer. It faces another investigation into allegations that its executives took bribes from would-be suppliers and that it formed front companies to secure foreign contracts.

And the scandal has not only rocked German business but has also embroiled politics. Social Democratic politician Hans-Juergen Uhl, a former member of the VW works council, has also been indicted for corruption. Uhl has been charged with two counts of being an accessory to a breach of trust, and of making false statements while under oath.

Prosecutors say that Uhl participated in the now notorious VW business trips to Barcelona and Seoul in 2001, "during the course of which the services of prostitutes were allegedly called upon." Germany's parliament, the Bundestag, has already voted to lift his parliamentary immunity so that he can be prosecuted. Uhl denies that he did anything wrong.



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