German labor reformer, former VW exec, goes on trial in bribery scandal

BRUNSWICK, Germany (Reuters) -- The architect of Germany's biggest post-war labor reforms and a former top Volkswagen executive went on trial today for his role in a corruption scandal at the car firm.

The case, which erupted in 2005, damaged Germany's corporate reputation and spawned hundreds of headlines about sleaze at VW, Europe's biggest auto group.

Peter Hartz is accused of plying senior worker representatives who sat on VW's supervisory board with company money, including paying for trips to brothels as far away as Brazil.

In Germany, employee representatives are legally entitled to sit on their company's supervisory boards and have a say in corporate decision making.

As 65-year-old Hartz arrived at the court in a luxury VW Phaeton saloon about 25 people shouted "traitor" and "into the slammer with him".

Hartz, who was VW's personnel chief, faces 44 charges of bribery and breach of trust, and faces a hefty fine and a two-year suspended sentence.

One of the charges is that he paid Klaus Volkert, the one-time boss of VW's works council -- the body that represents workers -- a total of 1.9 million euros ($2.5 million) between 1994 and 2005. The money was in addition to Volkert's salary.

Inside the court, Hartz's lawyer Egon Mueller said his client admitted the charges.

Hartz, who resigned from VW in 2005, came to national prominence for devising a series of labor reforms between 2003 and 2005 for former Social Democrat Chancellor Gerhard Schroeder to boost Europe's biggest economy, which was stagnating at the time.

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