German prosecutors search Volkswagen headquarters on suspicion of illegal payments to works council

The German Prosecutor’s Office has carried out several searches in offices of the German car manufacturer Volkswagen at the group’s headquarters in Wolfsburg, in the north of the country, on suspicion of illegal payments to members of the works council. The Braunschweig prosecutor’s office has reported that the manufacturer is suspected of paying committee members salaries that were too high compared to the rest of the staff as part of preferential treatment. Volkswagen has confirmed the searches, which occurred on Tuesday, and assured that it “is cooperating fully with the investigating authorities.”

For years, the justice system has been investigating suspicions that Volkswagen was paying excessive salaries to the workers who make up the works council. At the end of 2017, within the framework of these suspicions, Volkswagen reduced the salaries of 15 members of the works council who were on the management ladder as a precautionary measure. Among them Bernd Osterloh, who was then the head of the committee and who at the time of his best remuneration had received around 750,000 euros gross per year, including extraordinary payments.

Those affected filed a complaint, an arbitration process took place, and they finally recovered their managerial salaries starting in the spring of 2019, explains the economic daily Handelsblatt. According to a spokesman for the prosecutor’s office, the new accusations date from precisely that year, so they could contradict the result of the arbitrations. The prosecutor’s office has not provided more details as the investigation is open.

Over the years some complaints related to the committee’s salaries have also reached the courts. In 2021, four Volkswagen human resources managers, including Karlheinz Blessing and Horst Neumann, were acquitted of giving favorable treatment to the members of the works council in their remunerations received between 2011 and 2016. The bonuses alone amounted to between 80,000 and 560,000. euros annually. However, earlier this year a federal court overturned the sentences.

The automobile company was forced again to review the salaries of several of these people. Since then the committee has denounced a situation of legal uncertainty. So far, according to the Handelsblatt, 17 affected people have sued before the labor courts of Braunschweig, Hannover, Emden and Kassel and 16 of them have been successful.

A spokesman for the prosecutor’s office told several German media that the background of the current investigation is “the payment of salaries to members of the works council, in violation of the prohibition of preferential treatment contained in the Law on the formation of companies.” Police have also searched four private apartments that have no connection with the car company.

On the other hand, Volkswagen is going to reduce the production of electric cars at its factories in Zwickau and Dresden, in eastern Germany, due to the drop in demand. In the first two weeks of October it will cut production of the ID.3 – this model, produced in Dresden, will cease production completely between October 2 and 16 – and the Cupra Born. In June the company had made the same decision to cut production with the models, ID.4 and ID.7, which are manufactured in Emden. A year ago, Germany withdrew aid for the purchase of electric vehicles.

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