Former VW Manager, Labor Leader Convicted in Bribery Scandal

Former Volkswagen AG labor leader Klaus Volkert and Klaus-Joachim Gebauer, a former human-resources manager for the auto maker, were convicted today for their roles in a bribery scandal involving prostitutes and luxury trips.

Volkert, the former chief worker representative of VW’s supervisory board, was sentenced to 33 months in prison by a court in Braunschweig, Germany, for accepting improper bonuses and benefits, Bloomberg says.

Volkert, 65, was accused of demanding €2.7 million ($4 million) in perks for himself, other union representatives and his Brazilian mistress in exchange for favorable votes on policy.

Gebauer, 63, received a 1-year suspended sentence for providing luxury trips and other favors to labor officials. He was accused of organizing “side programs” involving prostitutes and extra benefits for work representatives, costing VW €1.3 million ($1.9 million).

The trial was the culmination of an investigation into claims VW managers bribed labor leaders from 1995-2005 in exchange for favorable policy votes.

The probe revealed the former managers cost the auto maker €5 million ($7 million) that was spent on travel, jewelry and bar bills. VW since has tightened its financial controls.

Former VW Chief Personnel Officer Peter Hartz also was convicted as a result of the investigation.

Hartz last year received a suspended 2-year sentence and a €576,000 ($853,691) fine after admitting he funneled €2 million ($2.9 million) to Volkert between 1995 and 2004 in order to win union support for company decisions.

Hans-Juergen Uhl, a former labor leader, was fined €39,200 ($58,108) last June after he admitted taking part in sex parties at VW’s expense.