Ex-labour chief at VW goes on trial

The former head of Volkswagen’s powerful workers’ council went on trial on Thursday in the latest episode of the perks-and-prostitutes scandal that since 2005 has shaken Europe’s largest carmaker.

Klaus Volkert, who could face up to 10 years in prison if found guilty, is charged with 48 counts of incitement to embezzlement by receiving €2.5m ($3.6m) in illegal payments from VW for himself and a Brazilian girlfriend.

The trial in Braunschweig, northern Germany, is the latest embarrassment for VW, after former personnel chief Peter Hartz in January pleaded guilty to making the secret payments to Mr Volkert between 1995 and 2004 to smooth labour relations and to ensure works council acceptance of VW’s restructuring plans. Mr Hartz received a two-year suspended sentence and a fine of €576,000.

The new trial will again cast critical light on VW’s often cosy labour relations system. Mr Volkert, who was a senior member of the IG Metall engineering trade union, is also charged with breaking laws on labour-management co-determination.

Ferdinand Piëch, former VW chief executive and current VW supervisory board chairman, is due to give evidence on January 9. He has denied any role in the affair.

Also on trial is Klaus-Joachim Gebauer, a former personnel executive who allegedly co-ordinated the payments to Mr Volkert. He faces 40 charges of breach of trust and could receive a five-year prison sentence if found guilty.

Thursday’s hearing focused largely on legal details. Ahead of the trial both men have acknowledged that payments were made but denied that laws were broken. Both denied the charges in court on Thursday.

Separately, Wendelin Wiedeking, chief executive of Porsche, VW’s largest shareholder, sought to reassure VW employees that the carmaker would not be broken up. In full-page newspaper advertisements this week, he said: “Unlike some hedge funds, Porsche has a substantial interest in keeping the company’s current structure.”

The trial is due to run until late January.

Copyright The Financial Times Limited 2017. All rights reserved. You may share using our article tools. Please don't copy articles from FT.com and redistribute by email or post to the web.