Volkswagen and unions reject allegations over works council payments

Volkswagen and its unions on Wednesday rebuffed allegations that the automaker’s top labor representative has been paid too much, looking to calm the waves a day after prosecutors and tax investigators raided the workplaces of senior Volkswagen authorities.

The recent troubles contribute to a string of legal fights over two years into the diesel emissions scandal and just weeks after European Union and German antitrust authorities had swooped on the company and competing automakers over suspicions of collusion.

Volkswagen and the works council said in different statements on Wednesday that payments to Bernd Osterloh, the carmaker’s labor leader, remained in line with legal standards. Osterloh’s workplace was raided on Tuesday in addition to those of automaker’s finance chief and head of personnel.

Osterloh and fellow members of automaker’s supervisory board are due to meet on Friday to validate management’s budget for the next five years to further the company’s aim of transforming itself into a world leader in green transport.

The raid by prosecutors and tax officers was associated with presumed overpayment and related tax evasion, a person knowledgeable about the matter stated, referring to the potential for overpayment to lead to higher operating costs and the payment of too little tax.

But under Germany’s corporate tax law, companies are entitled to state only half of the compensation of supervisory board members for tax purposes, a tax professor at Berlin’s Free University stated.

“It remains to be seen whether suspected tax fraud inspired this action,” the professor stated on the condition of anonymity.