I Smell Sex and Bribery: Volkswagen's Not So Secret Shame

Volkswagen's recent troubles at Skoda are spinning into a sex-and-bribery scandal that could affect the re-election chances of Chancellor Gerhard Schr der, several news agencies are reporting. Following charges of corruption at the company's Skoda division, new allegations that Volkswagen plied union bosses with with pricy vacations, hookers, as well as nods and winks in the face of corruption, are swirling in the German tabloid media. And that's not all. [Update: Personnel chief, Peter Hartz resigns.]

Most serious are new charges that the company twice flew in a "lap dancer" from Portugal to "entertain" (quotations ours) two VW board members at the Georges V hotel in Paris.

The scandal has cast a spotlight on the company's personnel chief Peter Hartz, whose framework for labor-market reforms was adopted by Schr der — with unpopular results. Hart has already offered to resign from VW, but the whole mess has become a political tug-of-war between the Christian Democratic-run state of Lower Saxony, which owns around 18 percent of VW, and Schroder's Social Democrats, which already have little support among trade unionists.

Of course, we're simplifying the story quite a bit. In the end, however, the politization of the allegations could mean a defeat for Schr der, and the election of a new, pro-union government. In turn, it will likely weaken VW's negotiating position, and cause the company to rethink its labor-management reform strategies, which have ben central to its cost-cutting efforts. And ultimately, its corporate survival.

The sex and bribes scandal at VW that could finish Schr der [The Times (UK)]

Related:
Prosecutors Probe Alleged Corruption Scandal at VW s Skoda [internal]