Imhotep Evil

Here is the Times:

Scandal leaves VW in the pits
£4.8m seems to have been blown on call girls and wild living, writes Michael Woodhead from Berlin

WORKS COUNCIL officials normally concern themselves with the problems of their mates on the production line. Have they been issued with the correct boots, for example.

Rarely do they have to undo the delicate strap of a high-heeled shoe tethered to the sleek ankle of a Brazilian call girl.



But then not everyone can work for Volkswagen.

Dallying with prostitutes, jetting your mistress first class around the world, setting up dubious business deals, ordering champagne in luxury hotels — these days this is apparently more the life of the working man’s representative in a global company, especially if it is a German one.

Quite why Klaus Volkert, head of Volkswagen’s general works council, lost faith with his working-class principles and took to the vices of an arrant capitalist is a mystery.

Maybe a dusky beauty called Adriana Barros is the reason. Of all the dozens of women involved in what Germans curtly refer to as “The Volkswagen Affair” Barros, a Brazilian television presenter, has become the most prominent. The rest were expensive call girls who charged €1,000 (£690) a night (without extras) in cities around the world. The years of jet-setting from one five-star hotel to another read like a sexual Baedeker guide.

Volkert is one of a number of senior Volkswagen figures who have been accused in a sleaze scandal that goes to the heart of the company’s boardroom. German prosecutors have spent months tracking mistresses and prostitutes through night clubs in Prague, Barcelona and Sao Paulo as well as unravelling sham companies in India and Africa allegedly set up by board members to line their own pockets.

Millions of euros, many of them from Volkswagen’s pension fund, are thought to have been misappropriated. Almost £280,000 was paid to Barros alone. One of those involved said Volkswagen had paid out £4.8m in the past decade billed as “business in the interests of the company”. All of it was spent on wild living and more women than you could fit into a fleet of Golfs.

This is a story of how the once shining example of Germany’s social market model, the jewel in the crown of the post-war economic revival — the miracle years — was found to be corrupt and degenerate.

Questions about the moral turpitude uncovered at Volkswagen are likely to be raised at the company’s annual meeting in Hamburg this week. It is the first chance disillusioned shareholders will have to demand answers from the board.

“This will be the most controversial annual meeting in the company’s history,” said Ulrich Hocker, head of the respected shareholder-protection association, the Deutsche Schutzvereinigung für Wertpapierbesitz. “The scandal of call girls and sham companies has embarrassed shareholders and damaged the name of Volkswagen. We want to be assured this kind of thing no longer goes on.”

And as if the sex scandal were not enough, a power battle has erupted in the boardroom over the future of the chairman, Bernd Pischetsrieder. Ferdinand Piech, head of the company’s supervisory board, has been trying to oust Pischetsrieder — the man he brought in to rationalise the company.

“It would be crazy to change horses in mid-stream,” said Hocker. “There’s no real replacement on the horizon. I think shareholders will want assurances that Pischetsrieder stays in the job and sees it through. This power battle of Piech’s is very stupid.”

Ever since Adolf Hitler created Volkswagen in the 1930s the company has retained the air of a monolithic giant whose internal workings were as impenetrable as those of the Kremlin.

Not that anyone, least of all leaders of the German government, wanted to inquire. The state of Lower Saxony owned a large chunk of the company. Former chancellor Gerhard Schröder was happy to use the company’s jet to fly to the Vienna opera house. An estimated 100 politicians are said to have pocketed regular sweeteners from Volkswagen. Two of them recently admitted being paid almost £250,000 each.

Volkswagen was a success and everybody wanted to leave it at that — until the late 1990s when the car industry had to face up to high costs, overcapacity and poor sales. Volkswagen’s attempts at restructuring were half-hearted whenever they met union opposition.

To his comrades on the shop floor, Volkert was one of them — a Kumpel, a mate who stood up to the management that was threatening their livelihoods.

None of them guessed that Volkert and other members of the works councils at Audi and Skoda had been nobbled by Klaus-Joachim Gebauer, Volkswagen’s personnel manager.

Gebauer claims his orders to “do what it takes” came from the boardroom, from Peter Hartz, the head of personnel. According to documents he handed over to the prosecutors, between 2001 and 2003, Gebauer spent £650,000 on prostitutes, luxury hotels and high living. All of it was apparently signed off by Hartz as expenses under the heading of “spent in the interests of the general works councils”.

Volkert, whose salary was £180,000, could not get enough of a rake’s life. He was always short of cash, said Gebauer.

On one works-council trip to Hanover, Gebauer paid more than £10,000 for call girls.

“The union members always wanted the best,” Gebauer told a German newspaper. “For more than a decade I obtained prostitutes for them, without it once being queried.”

He explained that the girls would be used as gifts to the union officials Volkert wanted to bolster: “It strengthened a man’s position of power — who would get a prostitute and who wouldn’t.”

You could call it sexual healing. And not even Hartz was immune. Gebauer recalled how Hartz and Volkert trawled through three Lisbon brothels looking for a high-class Brazilian call girl named Joselia, who Hartz had once met.

“It got so that a trip without prostitutes was unthinkable. It didn’t matter which country or which city we were in,” he said.

Volkert’s constant companion on these forays over four years was 44-year-old Brazilian beauty Adriana Barros. She was paid “pocket money” of about £10,000 a time. The cover story was that Volkswagen was sponsoring a project to help the street kids of Brazil. When the accountancy firm KPMG was called in after the scandal broke, it could find no evidence of the £276,000 paid to Barros going to any such project.

Barros denies she was a call girl. “I am not a prostitute, but have worked for Volkswagen,” she said.

This lavish debauchery was taking place at a time when unemployment in Germany had climbed to a record of more than 5m, the government was sinking under a mountain of debt and economic growth had spluttered to a halt. And the man summoned by Schröder to come up with a formula to cut unemployment in half was none other than his old friend Hartz. Under various Hartz initiatives the workless were stripped of benefits and subjected to inquisitions about their personal finances.

At Volkswagen they partied on — until the five-star Schlosshotel in Berlin blew the whistle on Gebauer. He was seen wandering drunk through the hotel lobby with a near-naked Russian girl on his arm.

Uta Felgner, the hotel’s director, said: “I had to ban him entering the hotel again.” Gebauer retorted that as he spent nearly £35,000 a year at the hotel he had a right to do as he pleased. Felgner took her complaints to Volkswagen. “It was the first anyone at Wolfsburg (Volkswagen’s headquarters) knew that Herr Gebauer was a regular guest,” she added.

The incident was the beginning of the end for Gebauer and his friends. With suspicions aroused, an investigation was launched. Six months later Gebauer was sacked — but not only for the sex scandal.

What came to light was Gebauer’s close friendship with an even more colourful high-flyer — Helmuth Schuster, head of the Skoda division. Schuster and Gebauer together — with Volkert’s involvement — are alleged to have set up a series of front companies to cream off millions of euros for themselves.

The Indian government has issued an international arrest warrant for Schuster after £1.4m disappeared. It was state start-up money for a supposed Volkswagen plant under the name of Vahishta Wahan.

Another scheme was in Angola for an assembly plant. Schuster set up a company called AnCar to assemble knock-down Skoda models shipped from Lisbon. Volkswagen discovered that Schuster’s business partner was a known fraudster and declared the investigators had found “certain irregularities” in the way the company was set up.

Nearer to home was Schuster’s own company, F-Bel, with offices in Prague’s glittering shopping mall. The office manager was a former beauty queen, Dagmar Kalaskova.

According to prosecutors, F-Bel was the front for an array of holding companies. Gebauer and Volkert appear among the registered directors. There are suspicions that Volkswagen pension funds were used as collateral for these companies.

Schuster’s lawyer said the prosecutors had not come up with a shred of evidence against his client. Schuster, though, has disappeared — he is thought to be somewhere in Prague. He often calls his former wife, Ilona Reutter, at her home in southern Germany. She refers to him as Dr Kimble.

Schuster is the son of a Hamburg salesman. He wrote a brilliant thesis for his university doctorate on social engineering and policy. But power and money led him as far from his socialist principles as it was possible to go. By day he drove a Skoda but at night he toured the hotspots of Prague in his black Lamborghini with Czech actress and Playboy model Katerina Brozova — and any other girls he and Gebauer found in night clubs.

“Mixing with these girls we lost sight of ourselves and in the end were no better than them,” said Gebauer. “It was a world that no longer had anything to do with normality. Money was no object. Women were always there, always 20 to 30 years younger.”

In the real world, Volkswagen under Pischetsrieder is fighting to become more profitable and efficient. Insiders say that his battle with Piech has been put on hold, though his long-term future remains uncertain. Doubts in shareholders’ minds gathering at the annual meeting this week will centre on Pischetsrieder’s lack of toughness. “He is a great strategist but does not have the toughness to see things through,” commented one shareholder.

The man seen as his successor is Wolfgang Bernhard, the brand group chairman, who has repositioned Volkswagen against Toyota rather than Mercedes. He is seen as a fierce cost-cutter and effective rationaliser.

The company’s image has taken a knock but many investors have kept their faith in Volkswagen. Jürgen Pieper, an analyst in Frankfurt, said: “The market has very mixed feelings about Volkswagen. Some analysts are negative but others, like myself, are bullish in the long term. I am expecting above-average returns. It is the second-best-performing carmaker in Europe and the share price has shown 100% improvement in the past 12 months. The basis is good.”


OMG million dollars/euros on call girls/mistresses/prostitutes.