Sex, bribery and trust? Life is good at VW

Douglas A. Bolduc is a special correspondent for Automotive News Europe
Less than three years after key executives were convicted in a bribery and corruption case, Volkswagen Group has been named the most trustworthy of all companies in Germany's benchmark DAX stock index.

Last week VW issued a press release to say that Europe's largest automaker scored the highest in the Corporate Trust Index (CTI), a study carried out by the Institute of Communication and Media Studies of the University of Leipzig and PMG Presse-Monitor.

In the release, Guenter Bentele, professor of communication science at the University of Leipzig and the initiator of the study, said that VW was able to maintain high public confidence by prospering despite the global economic slowdown.

"In the midst of the worst-ever crisis in the automotive industry, the Group reported the best unit sales in its history," Bentele said in the release.

Not to take anything away from VW's recent success, but it just seems odd that it has now become synonymous with corporate trust so soon after a tawdry scandal that included bribes and prostitutes.

In early 2008, a German court sentenced the former head of VW's works council, Klaus Volkert, to nearly three years in prison for breach of trust. Volkert, who served on the company's supervisory board, received special bonus payments of nearly 2 million euros (nearly $3 million at the time) from the company's former personnel director, Peter Hartz.

The court said Volkert should not have received that money. Hartz was accused of ordering the money to be paid to executives on the company's works council in order to secure favorable votes in important company decisions, such as VW's restructuring plans, taken by the supervisory board.

Hartz pleaded guilty to making the secret payments to Volkert between 1995 and 2004 and received a two-year suspended sentence and a fine of 576,000 euros.

Former senior personnel executive Klaus-Joachim Gebauer was sentenced to one year of probation on 40 counts of breach of trust. Under orders from Hartz, Gebauer had organized so-called Lustreise or pleasure trips abroad for members of the works council that included prostitutes. Hartz had ordered Gebauer to treat works council leaders "generously."

At the time of the trial, which saw senior executives including VW Chairman Ferdinand Piech testifying in court, the prevailing view was that the scandal would cause significant damage to VW's image.

If damage was done, it appears that the wrongs have been forgiven and forgotten.