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