Germany Loves a Good Probe: VW Raided by Prosecutors Over Labor Chief's Salary

Matt Posky
by Matt Posky

Curious as to whether Volkswagen’s management agreed to “excessive” payments of its chief labor representative, German prosecutors raided the carmaker’s headquarters. While a raid certainly sounds bad, it seems like the only way the country’s government bothers to acquire information from automotive manufacturers anymore.

This year alone, VW has been subjected to numerous raids relating to its diesel emission scandal and possible pricing collusion between BMW and Daimler. While one imagines a swarm of suits, backed by uniformed officers, as employees frantically shred documents, the frequency of such impromptu investigations probably just leaves staffers annoyed. I’m starting to think the German government likes showing up unannounced more than the country’s car builders enjoy illicit activities.

Of course, we’ll have to see how this all plays out. So far, there have been plenty of investigative work and some in-country legal action. But the most recent round of cartel lawsuits have yet to finalize and Germany has been criticized by other nations for taking it too easy on its car manufacturers.

However, in this search, officials are specifically looking into payments made to VW works council head Bernd Osterloh. According to Bloomberg, the automaker confirmed the incident without providing further details. Prosecutors in Braunschweig, who began the investigation in May, believe that former and current Volkswagen management board members may have approved inappropriately high compensation for Osterloh.

The VW works council disagrees. “Prosecutors also raided the office of Bernd Osterloh, that seems to be a regular in these kind of proceedings,” the council said in a statement. “The state of affairs hasn’t changed: The probe doesn’t target Osterloh.”

The offices of Chief Financial Officer Frank Witter and personnel director Karlheinz Blessing were also searched during this week’s probe.

While Osterloh’s base salary is around 200,000 euros ($237,000), his highest total compensation for a single year, including bonuses, was closer to 750,000 euros, according to the labor group. Last year, he received 500,000 euros in payment. While those are sizable bonuses, both VW and the labor group claim they are within legal guidelines of what is acceptable for German executives.

They may have a point. Under the country’s corporate tax law, VW is only obligated to declare around 50 percent of the remuneration of supervisory board members for tax purposes. Provided they did so, the rest cannot be used against Osterloh and company in a tax evasion case.

VW’s supervisory board is scheduled to meet on Friday to finalize management’s spending plans for the next five years and discuss how best to shift the company into an EV-centric business over the next decade. Osterloh, who’ll be there, is seeking re-election as works council chairman in March.

[Image: Volkswagen]

Matt Posky
Matt Posky

A staunch consumer advocate tracking industry trends and regulation. Before joining TTAC, Matt spent a decade working for marketing and research firms based in NYC. Clients included several of the world’s largest automakers, global tire brands, and aftermarket part suppliers. Dissatisfied with the corporate world and resentful of having to wear suits everyday, he pivoted to writing about cars. Since then, that man has become an ardent supporter of the right-to-repair movement, been interviewed on the auto industry by national radio broadcasts, driven more rental cars than anyone ever should, participated in amateur rallying events, and received the requisite minimum training as sanctioned by the SCCA. Handy with a wrench, Matt grew up surrounded by Detroit auto workers and managed to get a pizza delivery job before he was legally eligible. He later found himself driving box trucks through Manhattan, guaranteeing future sympathy for actual truckers. He continues to conduct research pertaining to the automotive sector as an independent contractor and has since moved back to his native Michigan, closer to where the cars are born. A contrarian, Matt claims to prefer understeer — stating that front and all-wheel drive vehicles cater best to his driving style.

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3 of 7 comments
  • Steve65 Steve65 on Nov 15, 2017

    The story completely switches gears at the end. So which is it? Illegally excessive pay, or tax evasion?

  • Heino Heino on Nov 15, 2017

    VW reminds me of me in high school. The principal wants to see you again! Don't worry VW it gets better in college, where the more you party, the better your grades get. No I don't remember her name.

  • ToolGuy "Nothing is greater than the original. Same goes for original Ford Parts. They’re the parts we built to build your Ford. Anything else is imitation."
  • Slavuta I don't know how they calc this. My newest cars are 2017 and 2019, 40 and 45K. Both needed tires at 30K+, OEM tires are now don't last too long. This is $1000 in average (may be less). Brakes DYI, filters, oil, wipers. I would say, under $1500 under 45K miles. But with the new tires that will last 60K, new brakes, this sum could be less in the next 40K miles.
  • BeauCharles I had a 2010 Sportback GTS for 10 years. Most reliable car I ever own. Never once needed to use that super long warranty - nothing ever went wrong. Regular maintenance and tires was all I did. It's styling was great too. Even after all those years it looked better than many current models. Biggest gripe I had was the interior. Cheap (but durable) materials and no sound insulation to speak of. If Mitsubishi had addressed those items I'm sure it would have sold better.
  • Marty S I learned to drive on a Crosley. Also, I had a brand new 75 Buick Riviera and the doors were huge. Bent the inside edge of the hood when opening it while the passenger door was open. Pretty poor assembly quality.
  • 3-On-The-Tree Alan, I was an Apache pilot and after my second back surgery I was medically boarded off of flying status due to vibrations, climbing on and off aircraft, so I was given the choice of getting out or re-branching so I switched to Military Intel. Yes your right if you can’t perform your out doesn’t matter if your at 17 years. Dad always said your just a number, he was a retired command master chief 25 years.