Ausgabe 29/2005

Scandal at Volkswagen With Prostitutes and Shady Executives, There's No Love Left in this Bug

By , Padma Rao and

Part 3: Under-handed deals

Back at VW headquarters in Wolfsburg, executives had long before been warned of Schuster's plans to go into business with shady partners. In 2003, VW learned that Johann Johannsen, a man with whom Schuster planned to do business exporting products to Angola, was a serial swindler. But Schuster nevertheless managed to dispel VW's concerns about his business partner.

VW's auditors are also investigating claims that Schuster transacted other deals, heretofore unknown to VW, with the companies he presumably owned. According to these claims, Schuster could never have supported his opulent lifestyle in Prague, where his Lamborghini garnered him the nickname "Lambo Schuster," with his salary as a board member.

The auditors are looking into whether a commission may have been paid to one of Schuster's companies for the hiring of about 4,000 Polish temporary laborers at Skoda. Schuster's attorney, Gillmeister, explains that the public prosecutor's office has so far failed to provide him with any evidence of criminal activity on the part of his client.

Similar scandals surrounding allegations of embezzlement by high-ranking executives exist in other companies that are not influenced by politicians -- at DaimlerChrysler, for example, as well as at Infineon, a technology company where the offices and homes of several executives were searched last Friday.

But the VW scandal takes on an additional dimension because the government of Lower Saxony holds an 18 percent interest in the company and retains voting rights that give it decisive power in decision-making. The fact that state legislators and federal parliamentarians from the state hold positions on VW's supervisory means that politics and electioneering are playing an increasingly important role in the complicated case.

Members of the Social Democratic Party, which holds power nationally, are accusing the state's conservative governor, Christian Wulff, of using VW as a public stage to discredit Hartz, who is also an advisor to Social Democratic German Chancellor Gerhard Schröder, and, perhaps later, other Social Democrats in the run-up to federal elections. But Wulff is hardly reproachable in this respect, since the Social Democrats got themselves so deeply entangled in Volkswagen that their presence could hardly have benefited the car-maker.

Wolfgang Bernhard has the toughest job at Volkswagen: he's responsible for stopping the haemorrhaging of red ink.

Wolfgang Bernhard has the toughest job at Volkswagen: he's responsible for stopping the haemorrhaging of red ink.

For years, Ingolf Viereck and Hans-Hermann Wendhausen, prominent Social Democrats sitting in the Lower Saxony state legislature, pocketed salaries from both the government and Volkswagen. The practice was anything but unusual at Volkswagen, where members of the state and federal parliaments regularly appeared on the payroll. But when news of it leaked out, Viereck and Wendhausen promptly terminated their VW contracts and stopped receiving VW salaries.

Last Wednesday however, the news emerged that both politicians are again moonlighting at VW, and they're on two payrolls -- Wolfsburg's and the government's.

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