Volkswagen Affair - Prostitutes Perks and Politicians .... final court cases ...

Klaus Volkert, now 65, was the head of Volkswagen's works council (the state of Lower Saxony is their largest shareholder - with an 18% interest voting rights giving decisive power in decision-making) and was once Germany's most powerful labor representative for the IG Metall union.

His trial resumes on Monday on 48 counts of incitement to embezzlement by receiving €2.5 million in illegal payments from VW for himself and his 7 year relationship with his Brazilian girlfriend , Adriana Barros, (now 43 - see pic) details of which unravelled after his resignation on 30th June 2005.The 81-page indictment took more than two hours to read out at the start of the trial.

Stern claims to have seen e-mail traffic between Mr Volkert and his 43-year-old Brazilian mistress, who was paid more than €23,000 (£16,000) a quarter by Volkswagen for “inter-cultural projects”. One exchange of e-mails has Ms Barros appealing: “I Have Too Much Problems About Money”. Mr Volkert replies (on June 27, 2005): “This is the last you will hear from me, I am ending my job.” He reminds her that she should say she was involved in children’s projects.

It is alleged that Klaus-Joachim Gebauer, a former personnel executiveco-ordinated the payments to Volkert. He faces breach of trust charges "Breach of trust" is too mild a translation of the German "Untreue" which - in its basic meaning - means disloyalty but, in this usage, is the word used for the crime of "corruption".

Gebaur could receive a five-year prison sentence if found guilty.Gebauer, accused of organizing company-paid holidays including prostitutes for works council officials on instructions from Peter Hartz (his boss), has admitted most of the charges against him -- it appears he managed to spend €780,000 within two years without ever having turned in any receipts ... other than a piece of paperon which he would write something to the effect of: "€6,880 spent, in the interest of the company, for the Group Works Council."

Peter Hartz (sometime advisor to Gerhard Schroeder) in the city of Braunschweig this January - he had worked at VW for 50 years pleaded guilty when charged with faces 44 charges of breach of trust involving making secret payments to Volkert between 1995 and 2004 to smooth labor relations and to ensure the works council accepted VW's restructuring plans. Hartz' lawyer, Egon Mueller said that no-one else on the VW board knew of Mr Hartz's payments. Hartz received a two-year suspended sentence and a fine of €576,000.(BBC) (Prosecutors have dropped a separate charge that he had used company funds to pay for prostitutes during business trips.)

German scandal mag Bunte published allegations by the wife of Helmuth Schuster, the former director of Volkswagen's Czech subsidiary, Skoda, who was sacked without explanation or notice . His wife, "Ilona R.," alleges that Viagra and other aphrodisiacs were handed out to supervisory board members during their pleasure trips -- and VW was footing the tab for it. They both enjoyed an opulent and extravagant lifestyle in Prague and his Lamborghini resulted in a popular nickname of "Lambo Schuster."

Herr Schuster however had a range of interesting front companies engaged in odd financial transactions ...An Indian company, Vahishta Wahan,(Although the company has the same initials as VW, it is not part of the VW Group. ) played a role in Schuster's planned business in the country. Whilst negotiating construction of a VW plant in India, Schuster allegedly used VW letterhead to submit a request to Botcha Satyanarayana Rao, the minister of industry of the Indian province of Andhra Pradesh, for €5 million in start-up money. The minister responded to Schuster's request by transferring €2 million to an account held by Vahishta Wahan. Once the money was received in Vahishta Wahan's account, it was promptly transferred to another account -- and ...er....has since disappeared.

In Angola, Schuster had also begun a promising project in 2005 . Through a Washington-based firm called Ancar Worldwide Investment Holding, he started a project that was to have assembled VW and Skoda cars in Luanda at affordable prices.The holding company had 51% Ancar Angola. The remaining 49 percent went to Angolan investors, including Tchize dos Santos, a daughter of President Eduardo dos Santos, and VW importer Antonio "Mosquito" M'bakassi. ..... no much seems to have happened since.

Now there is much more torrid speculation because former CEO Ferdinand Piëch, who now heads the supervisory board of VW is is due to give evidence on January and denies any role in the affair.Radio station NDR reported that the former chief financial officer of VW, Bruno Adelt, and the current head of VW's luxury car subsidiary, Rupert Stadler, are to testify as witnesses during the trial of Volkert and Gebauer. Stadler ran Piëch's office from 1997 until 2002 while Piëch was CEO of VW.

Naturally Politicians were in line when the trough was being filled and 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. (VW were also paying 6 other legilsators at the time)

Jürgen Gansäuer, president of the Lower Saxony Parliament, has said Wendhausen and Viereck must pay back €766,474, they received from Volkswagen while serving in Parliament over 10 years.

Lower Saxony filed a lawsuit May 31 2005 with the administrative court in Braunschweig, Germany, to force the two to repay the money plus interest. This was upheld on 16 November 2005 and he appealed - HHW he will not stand in the elections in Spring 2008.

As Volkert faces the court again his defence team argues that he is innocent of breach of trust. Since Volkswagen paid these sums to Mr Volkert, he cannot be said to have damaged the company. The slush fund was approved by the top management. It was an accepted instrument of labour policy.

Mr Volkert may well go free (and keep his mouth shut) ... to the relief of some very senior VW management and ...er .... some politicians.

PS : One person who remains to be charged in relation to the VW case is former teacher Hans-Juergen Uhl - now an MP for the centre-left Social Democrats.

A former member of VW's works council, he has been charged with two counts of being an accessory to breach of trust, and five counts of making false statements while under oath.

Although federal lawmakers voted to lift his parliamentary immunity in November 2006 so he can be prosecuted, he currently remains in parliament and has denied any wrongdoing.

Just as a background ..Hans-Juergen Uhl As a former Volkswagen Works Council member, is accused of consorting with prostitutes paid for by VW in Barcelona and Seoul. According to the investigation, Uhl is said to have participated in at least 10 sex parties, including on journeys to Mexico, Shanghai, Pamplona and several times in Hanover. A further eight charges are barred by the statute of limitations.

According to statements by Klaus Joachim Gebauer, who was responsible for the payments that funded the Works Council members pleasure trips, Uhl not only received regular payment for prostitutes he used personally, Uhl and he had also undertaken “scouting trips” to Barcelona and Budapest to seek out the best places to find prostitutes.

For the Volkswagen Works Council “everything had to be right, and everything had to be the best,” Gebauer said in his statement.

Moreover, Uhl, according to the indictment, had given five depositions in which he said he had never used prostitutes at the firm’s cost. The district attorney had 21 witnesses, beside Gebauer and other Volkswagen employees there are also several prostitutes. Files full of evidence with extensive statements and reports from the red light milieu have been presented to the court, while Uhl continued to deny all charges.

Finally on 4th June he resigned from his seat and the SPD and on the 14th June pleaded guilty and sentenced to 280 days.

Here is a nice picture from the Daily Mail of Ms. Adriana Barros.