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German Investigators Raid VW Headquarters — Again

Query focusing on payments to Works Council leader.

by on Nov.15, 2017

Volkswagen AG's headquarters was raided once again by German investigators.

German authorities again raided Volkswagen AG’s headquarters looking for information about potentially illicit payments to the head of the company’s Works Council.

Investigators searched the offices of supervisory board chairman Hans Dieter Poetsch, finance chief Frank Witter, and human resources head Karlheinz Blessing, a Volkswagen spokesman said. Files and computers were seized, according to the Reuters.

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The raid was related to suspicions of overpayments for works council chief Bernd Osterloh, the spokesman said. Osterloh’s office was also searched, Reuters reported. 

With Volkswagen looking for ways to cut costs in the wake of the two-year diesel scandal, Osterloh’s activities were certain to come under scrutiny because of his central role in the group’s labor relations under Germany’s co-determination law, which virtually guarantees employee and union representatives a board-level vote on cost-cutting measures.

(German automakers targeted in collusion inquiry. For the story, Click Here.)

The raid is also a reminder of past scandals at VW involving the use of lavish favors doled out to employee representatives. Ironically, federal investigators in the U.S. are in the midst of a similar query after it was discovered that FCA and UAW executives allegedly were using union training funds for their own enrichment. That investigation has now spilled over to Ford Motor Co. and General Motors.

Neither the works council nor the prosecutor in Braunschweig were immediately available for comment regarding the VW raid.

A person with knowledge of the new raids said the tax authorities were acting on suspicion of tax evasion. That is because over-remuneration could result in overly high operating expenses and the payment of too little tax.

(Click Here for more about the collusion investigation.)

It was revealed earlier that German prosecutors were investigating current and former executives at Volkswagen on suspicion that they paid works council chief Bernd Osterloh an excessive salary. In Germany, wasting corporate funds is legally a breach of fiduciary duty, Reuters noted.

Last year, German prosecutors opened an investigation into the former Volkswagen Chief Executive Martin Winterkorn regarding allegations of market manipulation in relation to the company’s diesel scandal, which has cost the company billions of dollars.

(To see more on the federal probe of union funds spilling over to Ford, GM, Click Here.)

According to the state prosecutor’s office in Braunschweig, there was “sufficient concrete evidence” that Volkswagen had deliberately delayed informing shareholders of last year’s emissions scandal and the potential financial damage it could cause.

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One Response to “German Investigators Raid VW Headquarters — Again”

  1. JAE says:

    Can they have that here, because there are a LOT of people being excessively paid…