Volkswagen informer affair: company seeks mole

Spicy details about the ongoing feud with a supplier come to light. VW is shocked by the eavesdropping in its own ranks.

The diesel scandal is not yet over and already the next affair: Volkswagen in Wolfsburg Photo: dpa

An informer affair is causing unrest at Volkswagen, the world’s largest automaker. Apparently systematically and over a long period of time, an unknown person recorded the conversations of an internal working group. Details have now been made public. Of almost 50 hours of audio recordings from 20 writes the online business magazine Business Insider, which made excerpts known over the weekend.

The working group had a delicate mission. Volkswagen has been at odds with the supplier group Prevent for years – in 2016, it even went so far that the assembly lines in Wolfsburg and other plants came to a standstill for days because no more seat covers and transmission housings were coming from Prevent subsidiaries. In 2018, VW wanted to put an end to the spook and cut ties with the companies owned by the Bosnian Hastor family. But the trouble continues to keep Wolfsburg on its toes. And not just because of the numerous court cases that the two disputants are still fighting out.

Until the relationship was terminated, the working group known as "Project 1" was concerned with how VW should deal with the contentious supplier. According to official statements, the VW-internal team had the task of "averting further damage to the company, its customers, employees and suppliers. All possible solutions were openly discussed, but many were also rejected."

It had not been a decision-making body. Responsibility for the team lay with the then Group Purchasing Director Francisco Javier Garcia Sanz and the Volkswagen brand’s Chief Procurement Officer Ralf Brandstatter. Brandstatter has since risen to the position of CEO at the core brand VW Passenger Cars. In the end, Prevent was "outsourced" as a supplier, as it is called in company jargon. In other words, Prevent no longer received any new orders and the contractual relationship was terminated.

The great search for the informer begins

At Volkswagen, the great search now begins: Who secretly recorded the conversations and for what reasons? If internal and confidential meetings were documented and "such information was leaked to the public without authorization, we are deeply shocked. The case will of course be investigated," was the statement from Wolfsburg on Sunday. A spokesman for Prevent said the company had no knowledge of the recordings.

The team reportedly also debated how a takeover of headrest and center console manufacturer Grammer by the Hastor family could be prevented. To this end, there were discussions with BMW and Daimler as well as financial investors, "Business Insider" quotes statements from the recordings. Volkswagen denies that there was any concerted action with other automakers in the Prevent matter.

From a legal point of view, such collusion would have been quite tricky because it could have undermined free competition. The Hastors’ takeover efforts ultimately failed due to the resistance of Grammer’s management.

The background to the informer incident at VW could be the many legal proceedings that are still open and that the Group and Prevent are fighting out in court. Prevent has filed a lawsuit in the U.S. seeking 750 million U.S. dollars in damages because VW allegedly put pressure on suppliers to reject takeover bids by the Hastors.

Motive initially unclear

VW, for its part, is seeking damages from the 2016 delivery stoppage and puts the amount at more than 100 million euros. According to Prevent, there are currently a good ten cases pending in German courts alone. Prevent is also in dispute with Daimler and is seeking damages from the Swabians – here, too, there are no longer any supply relationships.

The reason for the spying initially remained unclear. The corporate audit department in Wolfsburg must now investigate. It will probably be difficult to find evidence of possible misconduct after several years.

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