Former VW director to be sentenced in corruption trial

Jan 25, 2007, 14:40 GMT

Braunschweig, Germany - A former senior manager at Volkswagen AG was expected later Thursday to receive a suspended sentence and a fine for his part in a sex-and-bribery scandal that rocked Europe's biggest carmaker.

The sentencing of Peter Hartz, 65, followed his confession earlier this month to sanctioning illegal payments in the scandal, reports of which first emerged about 18 months ago and that were aimed at winning union support for company decisions.

Hartz is also known as the architect of tough labour market reforms introduced by former Chancellor Gerhard Schroeder's Social Democrat-led government.

The former VW manager's name is still attached to the reforms that were partly aimed at forcing Germany's long-term unemployed to seek work.

Hartz had expressed regret for his actions in the bribery and sex scandal and accepted 'criminal responsibility' for them, his lawyer told the court at the trial in the north German city of Braunschweig.

The scandal, which surfaced in June 2005, originally centred on allegations of bribes from potential suppliers and the creation of dummy companies which were used to secure lucrative contracts abroad.

But it quickly widened to include claims about flying around high- class prostitutes, visits to brothels and sex parties financed with company funds.

Altogether Hartz faced 44 counts of breach of trust and was the first person to stand trial in the case, which helped to turn the spotlight on the often cozy relations between unions and employers in corporate Germany's consensus-style management system.

Prosecutors had asked for a two-year suspended sentence for the former VW manager and a fine of a 576,000 euros (747,278 dollars).

Hartz admitted being the initiator of abuse which saw nearly 2.0 million euros in illegal bonuses paid to the then head of the company's works council, Klaus Volkert.

The payments, made when he was director of Volkswagen's personnel department, were allegedly used to finance lavish foreign trips by Volkert and his Brazilian mistress, Adriana Barros.

Hartz, who left the company in July 2005, said he ordered preferential treatment be given to Volker because of the important role he played in the company.

Under law, works council leaders need to be consulted on major decisions taken by leading German companies.