VW leadership troubles continue

July 20, 2007

Some stories attract international interest, while others remain almost unnoticed. Serious Volkswagen watchers will be aware of one leadership story that has not gained much international attention.

I picked up the scent of something of interest, because of a little surge of numbers of visitors to this site searching for news about the VW company. That’s when I came across a Reuters report

Volkswagen supervisory board member Guenter Lenz has resigned his seat, becoming the latest casualty of a scandal involving the use of corporate funds to bribe the carmaker’s senior labour leaders. According to a statement from the Hanover works council, Lenz told employees on Tuesday at a plant staff meeting that he would now resign his board seat and his post as the site’s works council boss after previously ceasing to actively execute his duties. The public prosecutor’s office in Brunswick accuses him of aiding and abetting fraud and partaking in parties with prostitutes paid for out of a VW slush fund. Lenz, who has also resigned from the Lower Saxony state parliament, would accept a court sentence for his wrongdoing, the Hanover works council said.

The scandal has already cost the jobs of VW management board member Peter Hartz, group works council chief Klaus Volkert, as well as a member of the German federal parliament.

The Financial Times also commented on the story. As did

Eurotribune a self-declared ‘left-leaning’ publication with communitarian goals. It writes about what it sees as unhealthy industrial arrangements in Germany’s internationals, and is particularly suspicious of the relationships between State, workers councils, and boards of organizations. It sees more trouble ahead for Volkswagen over its leadership and governance.

VW is plagued by a series of corruption scandals involving top union and work council members. Those already netted include the author and name-giver of the infamous Hartz-IV law, VW human resource manager Peter Hartz, as well as an SPD member of parliament. Now the scandal forced the resignation of Günter Lenz, who was at the same time the work council head for VW’s utility vehicle branch, a member of VW’s oversight board, and a member of the regional parliament for SPD. He is under investigation for visits to brothels on company money… Lenz denies the accusation. However, prostitutes have confirmed his story in the case of the top work council man, Klaus Volkert — who now sits in prison. The payments for the prostitutes were approved by Hartz himself.

Leadership lessons

It seems strange that this story was not been followed more closely by the international financial press. Maybe Angela Merkel and Nicholas Sarcozy have found time, in their new-found friendship, to muse over the matter as they explore the equally taxing issues of EADS governance.


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