FRANKFURT/HANOVER -- Volkswagen's embattled personnel chief and its works council denied on Tuesday a newspaper report suggesting Europe's biggest carmaker had bought off senior labor leaders to gain their support.
Breaking a silence 24 hours after the Suedeutsche Zeitung report, human resources head Peter Hartz called the allegations "absurd", while the works council threatened legal action.
Volkswagen, a former state-owned company whose legendary VW Beetle became a symbol for the German economic miracle, plays a leading role in shaping the country's wider labor relations.
If an ongoing investigation did uncover corruption within VW, it would rock the foundations of Germany's balanced system of co-determination between management and labor.
"No one in the management board knows of such (bribery) proceedings and no one on the board would have approved them," Hartz said in a statement.
Bernd Osterloh, who is expected to be elected head of the company's works council on Wednesday, also rejected the report.
"We will defend ourselves...with all available means, including legal action. The works council of Volkswagen cannot be bought," he said in a statement.
VW has acted swiftly to try to contain a scandal which began with allegations against a former manager at Czech unit Skoda and has led to accusations of wider problems.
Late last week, Europe's largest carmaker called in KPMG to audit its books after the company said it had discovered evidence Skoda personnel chief Helmuth Schuster may have diverted company funds.
Not only was Schuster a close adviser to Hartz, but also a business partner of the group's powerful works council chief Klaus Volkert, who resigned last week amidst allegations of wrongdoing in connection with Schuster.
In a separate statement sent by his lawyers, Volkert said he regretted having accepted a business proposition from Schuster and another VW employee -- both of whom are being investigated for fraud by state prosecutors.
Volkert denied any criminal wrongdoing.
"I have not received any financial advantages in connection with this business nor have I allowed other people to do so to the detriment of VW," he said, adding he would support the prosecution in its investigations.
...BUT NO CLEAN BILL OF HEALTH
VW's biggest shareholder, the German state of Lower Saxony, called for investigators to get to the bottom of allegations.
"There apparently was criminal energy at work and that's why it is very important that the audit runs parallel to the investigations of the Brunswick state prosecutor's office," Lower Saxony Economics Minister and VW supervisory board member Walter Hirche said on German television.
Lower Saxony owns around 18 percent of Volkswagen.
Klaus Ziehe of the Brunswick state prosecutor's office said the investigations would take months, not weeks, to complete.
"The lawyers of the two accused came to the prosecutor's office for an informative discussion. That is a signal that they want to support us," Ziehe said, adding this would not necessarily shorten the investigation.
"These are very time-intensive investigations," he said, adding that his office was currently analysing the documents it received from VW on Monday afternoon.
He did not exclude the possibility that the probe could widen, but said that for now prosecutors would base their investigation on evidence provided by the company.
Lower Saxony Premier Christian Wulff, a member of the VW supervisory board along with Hirche, said on television on Sunday that Hartz wasn't exempt from the probe, eliciting a swift condemnation from IG Metall union boss Juergen Peters.
Peters, a fellow VW board member, called the statement a clear attempt at discrediting Hartz and demanded that Wulff provide justification for his attack in a board meeting.
"No one is getting a clean bill of health," Wulff reiterated on Tuesday.
In Berlin, German Chancellor Gerhard Schroeder told a news conference that he would not involve himself in the discussion surrounding VW, but praised Hartz for his innovative policies.