HANOVER July 20 -- German prosecutors investigating suspected fraud at Volkswagen will review expense receipts linked to the chief liaison official to VW's powerful works council, a prosecutors' office spokesman said on Wednesday.
The widening probe by the Brunswick state prosecutors' office comes amid media reports that Volkswagen provided improper inducements, including paying for prostitutes, to secure the support of senior labor leaders on key issues.
Volkswagen and its works council have repeatedly denied that the workers' group was "bought" by management.
VW Chief Executive Bernd Pischetsrieder said in a letter to staff last week, however, that prosecutors would investigate receipts submitted by Klaus-Joachim Gebauer, VW's main liaison officer with the works council.
"There are such receipts, that much we know from Volkswagen," said Joachim Geyer, spokesman for the Brunswick state prosecutors' office.
He said that, if the receipts showed that there were payments to prostitutes, it would indicate that the company's suspicions of a breach of trust were warranted.
The investigations would be complicated, however, by the receipts' lack of details on services paid for, he said.
The prosecutors' investigation has led to the resignations of VW personnel chief Peter Hartz and works council boss Klaus Volkert, and raised questions about the German system of fostering close ties between management and labor.
Company sources said a review committee of the supervisory board would meet next Monday to discuss an expected interim report from independent auditor KPMG, hired this month by Europe's biggest carmaker to investigate the matter.
The Brunswick prosecutors' office is investigating allegations of fraud and betrayal of confidence against Gebauer and Helmuth Schuster, both former members of the carmaker's personnel department.
Schuster and Gebauer could not be reached for comment on the matter.
Gebauer was responsible for organizing trips and events for members of the works council and Pischetsrieder said the prosecutors' review of the receipts would examine questionable transactions in his accounts.
Gebauer filed a legal complaint against the company for wrongful dismissal, and his lawyer, Wolfgang Kubicki, has been quoted in German media reports as saying that his client had only acted on orders from superiors.
Kubicki, a prominent politician for the liberal Free Democrats, could not immediately be reached for comment.