Corp-Ethics.com - Report: Hartz sentenced in VW bribe case

Company	Volkswagen [Company Info]
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Date	Issue	Title
25th Jan 2007	Other Issue	Hartz sentenced in VW bribe case

Report

Peter Hartz, the official at the centre of a bribery scandal surrounding car giant Volkswagen, has been given a two year-suspended prison sentence.

Hartz, a guiding hand behind former German Chancellor Gerhard Schroeder's labour reforms, was fined 560,000 euros ($726,000; £369,000).

The former head of personnel at Europe's biggest carmaker escaped jail after cutting a deal with prosecutors.

He had sanctioned illegal payments to members of VW's powerful works council.

Works councils are made up of workers and management and have a strong decision-making role within major companies.

Some have argued that the system is a breeding ground for corruption.

The illegal payments were designed to ensure that council members kept close ties to VW's management.

Hartz, 65, was charged with 44 counts of breach of trust. He admitted on Thursday to paying bribes to Klaus Volkert, ex-head of the powerful works council of VW.

Some of his payments were used to pay for luxury trips, including to prostitutes in Brazil.

Hartz's lawyer Egon Mueller told the court in Brunswick, northern Germany, that "important decisions could not be taken without Mr Volkert's agreement".

Mr Mueller said the payments were aimed at "creating an atmosphere" in which business could be done.

"They were designed simply to stabilise relations between the two men," he said.

Hartz, who resigned from VW in 2005, gave his name to the series of labour reforms he devised for the former government of Mr Schroeder - which were designed to cut unemployment and stimulate Germany's economy.

Other Reports on Volkswagen
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22nd Jul 2005	Questionable Practice	Volkswagen	Scandal-hit VW in Indian payout
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