Saturday, July 09, 2005

More Volkswagen Corruption

VW is up to its neck in crime and corruption again. This time, VW's head of personnel, board member Dr. Peter Hartz, has resigned in a sex and kickback scandal that has Gerhard Schroeder's government in more trouble than it already was. Hartz is a close advisor to the Schroeder government and was the architect of Schroeder's labor policy. Hartz is accused of authorizing more than $30,000 for prostitutes to entertain various VW executives and union officials.

Also resigning were Helmut Schuster, the personnel chief at Skoda, VW's Czech division, his colleague Klaus-Joachim Gebauer and Klaus Volkert, the powerful head of the group's works council. Volkert had worked with Hartz for years to help secure VW's more than 100,000 jobs in Germany. Gebauer is accused of paying a prostitute to entertain two executives with his VW issued credit card.

One top manager is supposed to have received kickbacks of up to $3 million in India alone. The state prosecutors are investigating this and the press is all over it. Volkswagen has hired consultancy KPMG to conduct an independent audit.

You may recall that General Motors' chief of purchasing, J. Ignacio Lopez de Arriortua, left GM for VW in 1993, allegedly taking the cookie jar with him. In one of the highest profile industrial espionage cases in history, GM sued VW for the industrial thefts and VW settled the suit in 1997 when VW agreed to pay GM $100 million and buy another $1 billion worth of GM auto parts.

In May of 2000, the U.S. Justice Department unsealed a six-count indictment charging Lopez de Arriortua with stealing GM documents and funneling them to the German automaker. Lopez is hiding out in Spain, reportedly in ill health resulting from an auto accident. His lawyer says he is suffering from memory loss.

Volkswagen's history is one of crime and corruption. The original VW design by Ferdinand Porsche was personally commissioned by Adolph Hitler who also gave the car and the company its name. Volkswagen means "people's car". In 1936, SS members were required to drive new versions to assure that the bugs from previous versions had been corrected.

Defenders of Porsche say he was unhappy with the Nazi's use of the car for propoganda purposes, but information exists to indicate that among Porsche's close friends were, besides the Fuhrer himself, Dr Robert Ley, leader of the German Labour Front (Deutsche Arbeitsfront), Reichsfuhrer-SS Heinrich Himmler and Fritz Sauckel, General Plenipotentiary for Manpower Allocation (Generalbevollmachtigter fur den Arbeitseinsatz). Porche joined the Nazi party himself in 1937, the year in which Hitler completed the first phase of consolidating his power. As Chairman of the Panzer Committee, Porsche introduced innovations which formed the basis for a whole range of armored vehicles, including the "Tiger" and the "Ferdinand" destroyer. His military production was to encompass a wide range of aircraft, including the Ju 88, the Luftwaffes standard bomber, and the Focke-Wulf interceptor, the scourge of the Allied bombers. He also played a vital role in developing and manufacturing retaliatory weapons (Vergeltungswaffen), such as the Fi 103 flying bombs, used indiscriminately against civilians.

The first Volkswagen plant was completed in 1938 after Italian labor was brought in. By the spring of 1945, Volkswagen's workforce was 90% non-German forced, or slave, labor. Because of the firm's location in a sparsely populated region in northern Germany, and because many of its employees were drafted to fight in the German army, it relied heavily on forced labor. Volkswagen employed an estimated 15,000 to 20,000 forced laborers to maintain production during the war. About 1,500 of these workers were Jewish. The company says it does not know how many of the former workers are still alive.

I don't know how Porsche escaped prosecution at Nuremburg but I would surmise that he was considered a key to the success of The Marshall Plan to rebuild war ravaged Europe. In 1998 Volkswagen was forced by two class action lawsuits, filed in New York and New Jersey, to establish an $11.7 million fund to compensate Holocaust survivors who were forced to work as slave laborers during World War II.

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