Wednesday, July 06, 2005

The Skoda-Volkswagen Scandal (I)

Allegations of bribery, fraud and corruption are raging around the Volkswagen concern, centring on VW's Czech Skoda operations but fanning out way beyond them.

There are two main aspects to the scandal: the corruption is alleged to involve both Skoda/VW's internal works councils as well as the company's external suppliers.

The "works councils" are a peculiarly German set-up which allow "worker representation" on the boards of major German companies. The head of the VW works council, Klaus Volkert, has resigned amidst allegations of whoring and fine living at the expense of VW´s workers, shareholders, and customers.

Skoda's head of human resources, Helmuth Schuster, meanwhile, stands accused of taking bribes from suppliers, in one instance linked to the setting up of operations in India, a plan which has been abandoned in the wake of the scandal.

That the head of one of Germany's biggest works councils should be brought down in this way is especially piquant in light of the recent "Müntefering Terror" - in which the chairman of Germany's governing SPD party sought to blame all the country's economic ills on evil international capitalists.

This new scandal shows that Germany's problems, pace Chairman Müntefering, can spring from home-grown practices too. In this case, the old Rhineland-capitalism model, which stood for Sozialgerechtigkeit (social justice) alongside creation of stakeholder value. Worker councils remain an integral part of this model, which was often hailed, during the 1970's, as a viable alternative to the more red-blooded Anglo-Saxon model. (In fairness, the Rheinland model was notably successful at one stage - from the 1950's until the late 1970's.) Since then, of course, it has become somewhat dated and sclerotic, in patent need of reform.

The scandal's alleged perpetrators thus have a twinned, Janus-face: that of the workers' representatives, scowling to the left, and that of the evil international capitalists, sneering to the right. Unedifying as it all is, it may yet have a positive effect. For one, it makes it impossible for German politicians such as Chairman Müntefering to cast the scandal in a purely anti-capitalist light. The comrades have their snouts in the trough, too, not to mention the charms of Adriana B., the Brazilian VW employee with purely horizontal duties. And the scandal may even encourage a more nuanced view of Germany's economic plight, something devoutly to be wished as national election campaigns come to a head, and the populists are sniffing about for their usual, convenient scapegoats.

Update, 27th July 2005: VW chief Pischetsrieder sends ex-ambassador to "pacify India".

Fallstricke quer durch den Konzern - - Wirtschaft

No comments: