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GERMANY: Auditors Detail VW Corruption in India and Czech Republic

Deutsche Presse-Agentur
November 11th, 2005


Independent auditors confirmed Friday to Volkswagen's senior board many of the details published in news reports in recent months about corrupt dealings by managers in the car company's personnel department.

Compiled by the auditing firm KPMG at Volkswagen's expense, the report divides the scandal into six distinct areas, beginning with plans to establish a Volkswagen assembly plant and dealer network in the African nation Angola.

Helmuth Schuster, a German high flyer in the department who was seconded to the company's Czech subsidiary Skoda as director of labour affairs, and Klaus-Joachim Gebauer, a senior personnel manager in Wolfsburg, were fingered as the key figures in this.

The report said it was "highly likely" they had sought to profit in Angola as undisclosed shareholders in a company seeking the agency.

The KPMG report added there were "clear indications" that money flowed into private accounts of the same two men in connection with Volkswagen plans to establish an assembly site in India.

In September, Volkswagen offered to refund 2.4 million dollars to the government of Andhra Pradesh, which had reportedly paid the sum to a Schuster company in the hope that he would influence the location decision in favour of the southern Indian state.

In the Czech Republic, Volkswagen was invited to establish a car- oriented theme park called the Auto-Forum in Prague.

According to KPMG, Gebauer, along with a former works council chairman named Klaus Volkert and a Schuster associate were shareholders in the company that promoted this proposal and sought this business.

The auditors' report also reviewed how Schuster had sought to invest money from a VW pension fund, possibly so he could cream off the interest. KPMG said VW's system of internal checks had prevented this.

The dry account by the auditors of sex parties and holidays at company expense came to the conclusion that Gebauer obtained had reimbursement of expenses claims over a five-year period to the extraordinary total of 939,000 euros (1.1 million dollars).

The report observes that part of the sum was for his private purposes or for "non-company persons", a reference to prostitutes. It says a further sum of 635,000 euros was received by a woman friend of Volkert "without evident benefit" to Volkswagen.

It says some of the invoices sent in by the woman had been cleared for payment by Peter Hartz, formerly Volkswagen Group director of personnel.

Between January 2001 and May 2005, Gebauer sought reimbursement for 108 works council trips or events.

The auditors concluded that one such trip was clearly private. In nine cases, it could not be established if there was a business purpose or if they were for pleasure only. Frequent participants in such trips were Schuster, Gebauer and Volkert.

The sixth area explored by the auditors was Schuster's own travel budget. They said his expenditure of 1.3 million euros would require further study along with the contracts he signed and incorporations of firms he authorized in his capacity as a Skoda director.

About 20 KPMG staff combed Volkswagen records before writing the report, which is separate from an inquiry by state prosecutors.

They reported to Klaus Liesen, a supervisory board member who chairs Volkswagen's audit committee. KPMG has been instructed to continue the investigation, which so far cites 25,500 company documents. Some 100 persons have been interviewed.

Chief executive Bernd Pischetsrieder said Friday the inquiry still needed to see documentation from India. Activities at foreign subsidiaries and flows of money outside of Volkswagen would also be investigated.



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